Fed's Lisa Cook says inflation remains stubbornly high, needs more rate hikes

WASHINGTON Reuters - U.S. inflation remains stubbornly and unacceptably high, and that requires continued interest rate increases to make sure it falls, Fed governor Lisa Cook said in her first public comments on monetary policy since joining the central bank's Washington-based board.

Cook concluded that recent improvements in job vacancies, rent and other data were not enough to conclude that the Fed had rounded the corner in its fight against rising prices, because inflation remains stubbornly and unacceptably high.

She said there are reasons to expect core goods inflation to slow in the coming months, and supply chains to improve in preparation for delivery at the Peterson Institute for International Economics.

She said that the overall economy is very tight because of the widespread nature of inflation pressures.

As a governor, Cook fully supported the large rate increases of three-quarter points approved at her first meetings, agreeing with the policy of front-loading monetary tightening to quicken its impact, and felt changes in policy needed to be rooted in inflation falling, not on forecasts of it doing so.

The preemptive approach of the Fed is appropriate. Cook said that a failure to restore price stability would make it much harder and more painful to restore it in the future, despite the fact that lowering inflation will cause some pain. I think policy judgments must be based on whether and when inflation actually falls in the data, rather than just in forecasts, given the current situation with risks to inflation forecasts skewed to the upside. She said that while at some point it will be appropriate to slow the pace of increases, she did not hint at her preference for the Fed's upcoming Nov. 1 -- 2 policy meeting.

Cook said that the path of policy should depend on how quickly we make progress toward our inflation goal.

Cook stated that their job is to manage the domestic mandate of stable inflation and the maximum level of employment consistent with it, and that she and her colleagues were very attuned to overseas economic developments that could affect the United States.