Federal Reserve officials warn of persistent inflation and signal possible rate hikes

Federal Reserve Governor Lisa Cook told a Washington audience on July 15 that she is “prepared to act” if inflation does not begin to slow, adding that it is prudent to wait a bit longer but that the balance of risks has shifted toward higher price pressures. She cited factors such as tariffs, the Middle‑East conflict and AI‑driven investment as potential sources of inflationary pressure. Cook noted that inflation remains well above the Fed’s 2 % target, with the preferred price index running about 3.7 % in the 12 months through June.

Fed Chairman Kevin Warsh, in his first congressional hearing since taking the helm, reiterated a “no tolerance” stance toward high inflation and hinted that the Fed may consider additional rate hikes later in the year. Warsh emphasized that the labor market remains stable but that inflationary pressures are still driven by monetary policy. He did not specify the exact tools the Fed would use, but referenced the possibility of adjusting interest rates and the central bank’s $6.7 trillion balance‑sheet holdings. Both officials made their remarks ahead of the Fed’s policy meeting scheduled for July 28‑29, and their statements have contributed to market expectations of fewer near‑term rate cuts.