Lisa Cook and Donald Trump have an open warafter the US president tried to fire her from her responsibilities at the Federal Reserve last August, a decision that was paralyzed by the country’s Supreme Court in October, at least until January. The clash between Cook and Trump, however, has not prevented the member of the Fed Board of Governors from now leaning towards defending a monetary policy approach that fits with the opinion of the Republican president and his acolytes since, although Cook does not want to comment on his support or rejection of lowering rates in December, has admitted in her first statements after the soap opera with Trump that she is more worried about employment than about inflation in the United States.
Cook explained, in a speech at the Brookings Institution, that she is more concerned about the danger of problems in the country’s labor market than about the possibility of a rebound in inflation in the coming months. “Policy is not on a predetermined path. We are now in a moment in which the risks, in both senses of our mandate, are high,” said Cook, who also distances himself from giving his opinion now on whether he believes a rate cut is necessary at the December meeting.
Of course, Cook herself now admits that last week’s rate cut “was appropriate,” because, in her opinion, “Risks to the labor market are now stronger than upside risks to inflation,” a speech that fits the one Stephen Miran is defendingTrump’s trusted man at the Fed, who was appointed in the summer to replace Adriana Kugler.
Although Cook now seems to be more aligned with Trump’s vision on the monetary policy and interest rates front, in Monday’s appearance it became clear that her opinions on other fronts are very different. In fact, part of the reasons that lead the economist to be closer to a rate cut, which is the opposite, is related to the damage that, in her opinion, Trump’s policies are generating.
To begin with, he admits that there is an inflationary risk due to tariffs, but considers that “the effect of tariffs on prices, in theory, should be a specific, one-time phenomenon,” which would not have replicas in the future. However, his concern about the health of employment in the United States is stronger, and it seems that it is also related to the policies of the Republican president, since, in his opinion, the decline that is occurring in job creation “can be modestly explained by a decline in population growth, derived from immigration policy,” Cook said.
