Director of the Federal Reserve (Fed), Lisa Cook said she still considers it appropriate for interest rates to continue falling towards more neutral levels, but recognized the risks on the horizon and reinforced that monetary policy is not on a predefined path.
“I still see that the direction of the appropriate path for the base rate will be downward, but the magnitude and timing of rate cuts will depend on the data received, the evolution of prospects and the balance of risks,” he said, in a speech during an event at the University of Virginia.
In particular, the leader warned that if progress in combating inflation loses momentum and employment remains strong, the Fed may have to pause the monetary easing process.
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“Alternatively, if the labor market weakens substantially, it may be appropriate to relax the policy more quickly”, he considered.
