US FOMC Member Cook Speaks

Fed's Cook: It is prudent to wait ‘a bit more time' for inflation to slow, but she is prepared to act if it does not occur 'soon'. Fed's Cook: Since last summer there has been a notable shift in risk towards higher inflation and away from the job market, which appears stable. Economic Outlook Thank you, Paul, for that kind introduction. I am honored to speak with you and all who have joined us here today.1 Persistently elevated inflation imposes an unacceptable burden on American families, and it is the Federal Reserve's responsibility to restore price stability. As a monetary policymaker, this challenge is top of mind for me. I am watching both sides of our dual mandate—price stability and maximum employment. However, as I have stated at several points this year, the risks from high inflation concern me more at this time.2 Even though this week's consumer price index and producer price index reports were softer than expected, they still imply that the price index we target rose 3.7 percent in the 12 months through June. That is 1.7 percentage points above our 2 percent target. We have not reached our 2 percent target in more than five years. To contextualize my views on the dual mandate, I would like to give you a broader sense of my economic outlook and discuss recent developments in monetary policy.

Thank you, Neale, for that kind introduction. Being back on Stanford's campus is always an honor and conjures up great memories. I spent several formative years here—first as a student in the AEA Summer Program, which prepares students to pursue graduate study in economics, and then as a National Fellow at the Hoover Institution. To say that these stints at Stanford were transformative would be an understatement. The summer program prepared me for and set me on a new intellectual and career journey, and my three years here as a postdoc set out an entirely new line of research inquiry. In fact, I started my research on patents and innovation or the economics of innovation here and benefitted greatly from my interaction with economists here at the Stanford Institute for Economic Policy Research (SIEPR), the economics department, the business school, the law school, and Hoover, including Kenneth Arrow, Tim Bresnahan, Jeremy Bulow, Milton Friedman, Avner Grief, Mitch Polinsky, Paul Romer, and Gavin Wright. From my decade spent in the Bay Area—here and at Berkeley, I witnessed how seriously new ideas are taken, examined, implemented, and spread. It is always invigorating to return to such a center of innovation.1 I applaud SIEPR for holding this event to discuss artificial intelligence (AI) and its power to influence the trajectory of the economy and transform the financial system. I know many in this room are grappling with how to harness this technology's obvious multidimensional promise while being mindful of important risks. Having adopted machine learning in the AEA Summer Program in 2018 when I was director and having used it in my research before coming to the Fed, I arrived at the Board of Governors in 2022 raising questions about and urging the study and adoption of AI. So, rest assured, policymakers at the Federal Reserve are also deeply engaged. Today, I will start by offering my latest economic outlook, with a focus on implications of AI for both sides of our dual mandate of maximum employment and price stability. Then, consistent with my long-standing support for responsible innovation, I will address the benefits AI could deliver for the financial system before addressing some of the risks and vulnerabilities the technology presents to financial stability. I will conclude by sharing how the Fed itself is embracing the power of AI to help ensure the financial system remains sound and resilient. FED'S COOK: INFLATION IS CLEARLY MOVING IN WRONG DIRECTION. RIGHT COURSE OF ACTION IS TO HOLD RATES STEADY FED'S COOK SAID THE FED IS PREPARED TO RAISE RATES IF DISINFLATION FAILS TO APPEAR, BUT WOULD ALSO BE READY TO CUT RATES IF THE LABOR MARKET DETERIORATES, WHILE WARNING THAT AI-DRIVEN JOB LOSSES COULD COME BEFORE FUTURE PRODUCTIVITY GAINS.

Fed's Cook: Labour market is in a low-hire, low-fire regime, and it's tough for the youngest workers.

Thank you, Professor Metrick, for the kind introduction and the opportunity to return to Yale to speak to the Yale Program on Financial Stability today.1 I have long admired and been a grateful consumer of all the insightful work you have done here since its inception in 2013. I know that a number of the staff of the Board of Governors have been contributors to, and are avid consumers of, your work. I place a high priority on using novel sources of information to address data gaps. Given that, let me commend the effort to turn the ...

Good morning. Thank you to the National Association for Business Economics for inviting me to speak with you today, and thank you to Jared for serving as our moderator. I am honored to share the stage with my former colleague Michael and my former student and research assistant Ging Cee, and I look forward to our discussion. In economics, artificial intelligence (AI) and productivity are among my favorite areas of inquiry. In the two decades before I became a Federal Reserve governor, I studied and contributed research to the ...