Federal Reserve Governor Lisa Cook articulated a prudent “wait and see” approach toward current monetary policy in a recent address, characterizing prevailing interest rates as only mildly restrictive and highlighting persistent inflationary pressures. Speaking at the Economic Club of Miami, she expressed concern over a bifurcated economic landscape that leaves low-income American households struggling, even as broader economic indicators show growth.
Cook reinforced support for the Federal Open Market Committee’s (FOMC) recent decision to maintain the policy interest rate at its current level, emphasizing that while inflation had seen significant reductions between 2022 and 2024, such progress largely plateaued in 2025. Notably, personal consumption expenditures (PCE) inflation closed last year at an estimated 2.9 percent, remaining stubbornly above the Federal Reserve’s targeted 2 percent goal.
She attributed much of the ongoing inflationary pressure to a marked increase in core goods prices following tariff hikes imposed the previous year. “Until I observe convincing and sustained evidence that inflation is receding back toward our target, maintaining the credibility of our commitment to price stability will remain my foremost priority,” Cook stated.
Despite a robust gross domestic product (GDP) growth rate of 4.4 percent in the third quarter of 2025, Governor Cook cautioned that headline economic success masks underlying disparities. She described the economy as operating at two speeds, or a “K-shaped” split, where high-income groups continue to sustain strong spending levels, in stark contrast to low- and moderate-income families who face growing financial difficulties, including increased loan delinquencies and stagnant consumption.
Cook also noted concerning rises in unemployment rates among Black and younger workers since the previous spring, reflecting financial strains within vulnerable communities. These challenges, compounded by long-term upward trends in housing, healthcare, and childcare costs, have contributed to consumer sentiment being lower than what typically accompanies a healthy economy.
Looking forward, Cook acknowledged risks facing the labor market, with the unemployment rate having climbed to 4.4 percent in December. However, she expressed some optimism that advancing artificial intelligence technologies may enhance productivity and, over time, support higher real wages. For the present, she emphasized that the balance of risks appears skewed toward sustained inflationary concerns, justifying the Federal Reserve's choice to hold interest rates steady for now.
Market expectations, as measured by the CME Group’s FedWatch tool, closely align with this perspective, showing more than a 90 percent probability that the Federal Reserve will keep policy rates unchanged at its March meeting.
Notably, key equity benchmarks displayed mixed performances recently. While the S&P 500 and Dow Jones indices yielded modest gains in 2026 to date, the Nasdaq 100 index recorded a decline. On the trading day following Cook’s remarks, the SPDR S&P 500 ETF Trust and Invesco QQQ Trust ETF, tracking the S&P 500 and Nasdaq 100 respectively, closed with losses of 0.48 percent and 1.75 percent.