Federal Reserve Governor Lisa D. Cook spoke at the Brookings Institution about the U.S. economy during the government shutdown. She noted above-target inflation and a slightly cooler but steady labor market. With official data limited, the Fed is using administrative and private-sector data to monitor the economy, a practice Cook emphasized in 2022. She said "this is a challenging time to give an economic outlook speech," according to the Board of Governors of the Federal Reserve System.
The Personal Consumption Expenditures price index rose to 2.8 percent in September, affected by tariffs on goods, similar to last year. Cook said she expects inflation to ease toward the Fed’s 2 percent target but added, "I will be prepared to act forcefully," if needed. Labor data is limited due to the government shutdown, but unemployment claims and job postings show the market is softening "only modestly." The unemployment rate was 4.3 percent in August, while youth and African American unemployment rates are rising, as reported by the Board of Governors of the Federal Reserve System.
Amid the impact of the government shutdown, Cook expects moderate economic growth supported by the AI sector. She backed a quarter-point cut in the federal funds rate to 3‑3/4 to 4 percent, calling the current monetary stance "modestly restrictive." She also said ending the balance sheet runoff before December responds to market signals, such as higher repo rates. Cook will continue to monitor incoming data, with upcoming FOMC meetings, including December’s, open to policy decisions, as stated by the Board of Governors of the Federal Reserve System.
