美联储在2024年最后三次议息会议上将政策利率下调了整整一个百分点，但市场预计在1月28日至29日的下次会议上，美联储将保持政策利率在当前4.25%至4.5%的区间内。Cook believes that the interest rate cuts by the Federal Reserve so far have significantly reduced the restrictiveness of the MMF policy.
Federal Reserve Governor Cook stated on Monday that, given the robust economy and inflation proving to be more persistent than previously expected, the Federal Reserve can proceed cautiously when it comes to further interest rate cuts.
Since the Federal Reserve began lowering the benchmark interest rate in September, Cook noted during a speech at the University of Michigan Law School that "the labor market has become more resilient, while inflation has turned out to be more persistent than I initially expected." Therefore, he believes that they can proceed more cautiously with further cuts.
The Federal Reserve has lowered the policy interest rate by a full percentage point over its last three meetings in 2024, but the market expects the Fed to maintain the policy rate within the current Range of 4.25% to 4.5% at its next meeting on January 28-29.
Cook stated, "Over time, I believe it may still be appropriate to shift the policy rate to a more neutral stance. However, the rate cuts so far have significantly reduced the restrictiveness of monetary policy. I have envisioned acting more quickly in the early stages of our easing policy, and then gradually loosening as the policy rate approaches neutrality."
Cook expressed that she believes the USA has started the new year in good shape, with the unemployment rate still low by historical standards and inflation "gradually, albeit unevenly, returning to our sustainable target of 2%."
In the second half of 2024, key inflation Indicators showed little progress, remaining about 0.5 percentage points or more above the Federal Reserve's target.
Non-farm payroll data for December 2024 will be released this Friday, providing the latest insights on employment and wage growth in the USA.
Cook spent most of her speech elaborating on her views on financial stability, stating that she believes the financial system is "robust and resilient." However, she pointed out some areas that require close attention, including the growth of private lending. In the private lending sector, the connections between lending institutions can sometimes be unclear, which may potentially impact the entire financial system during a crisis.
She added that the growth of AI tools could be a source of innovation in the financial system, but it could also become a source of risk if the models are biased or make similar mistakes.
Editor/ping