Federal Reserve Director Lisa Cook expects inflationary pressures to continue due to rising AI demand and oil prices

(Seoul = Yonhap News) Reporter Seol Won-tae = U.S. Federal Reserve Director Lisa Cook said that inflationary pressures will continue in the coming months due to artificial intelligence (AI)-related demand and rising oil prices, Reuters and others reported on the 28th (local time).

“The labor market appears to be well-positioned to tolerate rate increases,” Cook said at the AI ​​and Emerging Technologies Conference in Oakland, California. “Going forward, I will review what policy rates might be needed to bring inflation down to our target of 2%.”

“Of course, the number and size of future interest rate adjustments will be determined based on the economy’s response to policy measures so far and inflation and labor market data in the coming months,” he added.

Cook said inflation had remained "too high for too long" and in the 12 months to August it was about 3.8%, about twice the target of 2%.

“Inflationary pressures will continue in the coming months due to the spread of AI and the passing on of higher oil prices and supply chain disruptions due to conflict in the Middle East,” Cook said.

He said productivity gains driven by AI may lead to some disinflation in the medium term, but that the effects will not be seen quickly enough to offset inflationary pressures this year.

The financial market reflects a 75% chance that the Federal Reserve will further raise the benchmark interest rate in October, and also sees a high possibility of a third consecutive interest rate hike at the December meeting.

Previously, the Federal Reserve raised the base interest rate by 0.25 percentage points to 3.75-4.00% on the 16th. This is the first interest rate increase in 3 years and 2 months.