Fed may slow down interest rate cuts given robust economy, says Governor Cook

Investing.com -- U.S. Federal Reserve could adopt a more cautious approach to further interest rate cuts, considering the current state of the economy and the stickier-than-expected inflation, according to Fed Governor Lisa Cook on Monday.

Since the Fed started reducing its benchmark policy rate in September, Cook noted that the labor market has shown more resilience and inflation has been more persistent than initially anticipated.

Reuters reported that Cook made her remarks during a speech at the University of Michigan Law School.

"Over time, I still think it will likely be appropriate to move the policy rate toward a more neutral stance," according to Cook. However the cuts made to date "have notably reduced the restrictiveness of monetary policy.

"All along, I envisioned moving more quickly in the early stages of our easing campaign and then easing more gradually as the policy rate came closer to neutral," Cook added.

As the year started, Cook felt the U.S. was in a strong position, with a low unemployment rate by historical standards and inflation gradually, albeit unevenly, returning to the Fed's 2% target in a sustainable manner.

In her speech, Cook also shared her views on financial stability, describing the financial system as "sound and resilient." However, she pointed out certain areas that require close monitoring, such as the growth in private lending.

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Source: Investing.com