Federal Reserve Governor Powell: "Wholeheartedly" supports a 50 basis point rate cut
Fed Governor Cook fully supports a 50 basis point rate cut, believing that this reflects confidence in moderate economic growth and sustained decline in inflation. She mentioned that the labor market is trending towards balance, with inflation returning to the 2% target, but also acknowledged that economic normalization may make it harder for certain groups to find jobs. Cook emphasized the potential impact of artificial intelligence on labor productivity and called for social attention to the retraining and support of displaced workers
Federal Reserve Governor Cook said she "wholeheartedly" supports the Fed's 50 basis point rate cut last week, citing a slowing labor market and easing inflation.
Cook said in a speech prepared for delivery at Ohio State University on Wednesday: "This decision reflects our growing confidence that we can maintain a strong labor market against the backdrop of moderate economic growth and inflation continuing to decline sustainably to our target as long as we adjust our policy stance appropriately."
The Fed official did not specify how much more easing might be needed in the near term, but she will carefully study the upcoming economic data and risk balance when considering the policy path.
The Federal Open Market Committee (FOMC) cut the benchmark interest rate by 50 basis points on September 18 to a range of 4.75% to 5%. Forecasts released that day showed that the median forecast of Fed officials indicated the committee would cut rates by another 50 basis points at the remaining two meetings this year.
Cook said that the labor market is approaching balance and the inflation rate is returning to the Fed's 2% target, reflecting a welcome return from the turmoil of the COVID-19 pandemic.
However, she also acknowledged that "economic normalization" may make it harder for some people to find jobs, such as recent college graduates, those with lower levels of education, and minority workers.
Cook's speech focused mainly on artificial intelligence and its implications for American workers. She said the technology has the potential to provide "significant and sustained" impetus for labor productivity growth. She said that while artificial intelligence may eliminate jobs, it could also create new ones.
She said: "As a society, we will need to consider how to retrain and support workers who may be displaced, even as many others benefit from the application of artificial intelligence."