On June 26th, Caixin reported (Editor Zhao Hao) that Lisa Cook, director of the Federal Reserve Board, stated that it is appropriate for the Federal Reserve to reduce interest rates "at some point." She expects inflation to gradually improve this year and progress faster in 2025. Cook participated in a New York Economic Club lunch that day, and her speech "Toward More Balanced Trends and the Impact on Monetary Policy" was released in advance on the Federal Reserve website. Cook believes that it is appropriate to reduce policy restrictions at some point to maintain the healthy balance of the economy as inflation progresses significantly, and the labor market gradually cools down. She also added that the timing of adjustments depends on how economic data evolves and their potential impact on economic prospects and risk balance. Yesterday, Chicago Fed President Charles Evans and San Francisco Fed President Mary Daly also mentioned the downside risks facing the current US economy and labor market. They believe that interest rates can be lowered as long as inflation does not repeat. Cook expects that the three- and six-month inflation rates will continue to trend down on a "bumpy road," and monthly data may be similar to a "good" reading in the second half of 2023, but the annual inflation rate will remain roughly flat. She said, "Inflation next year will further slow down significantly: housing service inflation will decline; core commodity inflation will remain slightly negative; and core service inflation (excluding housing) will slow down over time." Cook pointed out that the Fed's current policy is already restrictive, which is putting downward pressure on total demand, "although the economy remains resilient and the labor market performs strongly, high interest rates are having an impact." She also mentioned that higher mortgage rates have slowed down home sales and construction, and loan default rates are rising due to price increases and increased borrowing costs, "although the rising delinquency rate is not yet so worrying for the overall economy, it needs to be observed." Cook stated that the labor market is about the same level as before the pandemic - "tense but not overheating." She added that data shows that last year's job growth was exaggerated and may still be this year.

Cook participated in a New York Economic Club lunch that day, and her speech "Toward More Balanced Trends and the Impact on Monetary Policy" was released in advance on the Federal Reserve website.

Cook believes that it is appropriate to reduce policy restrictions at some point to maintain the healthy balance of the economy as inflation progresses significantly, and the labor market gradually cools down.

She also added that the timing of adjustments depends on how economic data evolves and their potential impact on economic prospects and risk balance.

Yesterday, Chicago Fed President Charles Evans and San Francisco Fed President Mary Daly also mentioned the downside risks facing the current US economy and labor market. They believe that interest rates can be lowered as long as inflation does not repeat.

Cook expects that the three- and six-month inflation rates will continue to trend down on a "bumpy road," and monthly data may be similar to a "good" reading in the second half of 2023, but the annual inflation rate will remain roughly flat.

She said, "Inflation next year will further slow down significantly: housing service inflation will decline; core commodity inflation will remain slightly negative; and core service inflation (excluding housing) will slow down over time."

Cook pointed out that the Fed's current policy is already restrictive, which is putting downward pressure on total demand, "although the economy remains resilient and the labor market performs strongly, high interest rates are having an impact."

She also mentioned that higher mortgage rates have slowed down home sales and construction, and loan default rates are rising due to price increases and increased borrowing costs, "although the rising delinquency rate is not yet so worrying for the overall economy, it needs to be observed."

Cook stated that the labor market is about the same level as before the pandemic - "tense but not overheating." She added that data shows that last year's job growth was exaggerated and may still be this year.

Earlier that day, another director Bowman stated that it is necessary to maintain the current policy interest rate for a period of time to overcome inflation, and it is expected that US inflation will remain high for a period of time and there will be no interest rate cuts this year.

Bowman also stated that if necessary, further interest rate hikes are possible.

Editor / jayden