Embattled Fed Gov. Lisa Cook Signals She Won’t Support Interest Rate Cuts Any Time Soon

Federal Reserve Gov. Lisa Cook, who is tangled in a Supreme Court battle with President Donald Trump to keep her job, has signaled that she won't support interest rate cuts anytime soon.

In a speech Wednesday at the Economic Club of Miami, Cook made some of her strongest public statements to date in favor of leaving interest rates steady, saying the threat of inflation looms larger than risks to the labor market.

"At this time, I see risks as tilted toward higher inflation," Cook said. "Until I see stronger evidence that inflation is moving sustainably back down to target, that is where my focus will be, in the absence of unexpected changes in the labor market."

Last month, Cook joined Fed Chair Jerome Powell and the majority of the Federal Open Market Committee to vote in favor of leaving the overnight rate unchanged at a range of 3.5% to 3.75%, pausing rate cuts after three consecutive decreases in 2025.

The Fed uses higher interest rates to fight inflation, and lower rates to boost the labor market, targeting an annual inflation rate of 2% alongside maximum employment.

With CPI inflation running at 2.7% in January, Cook's comments suggest that she will not back further rate cuts until price increases decelerate, unless the labor market flashes danger signs.

"I think these comments are broadly in line with Powell's answers at last week's press conference," says Realtor.com® Senior Economist Jake Krimmel. "It's not that Cook is necessarily pleased with the labor market outlook; it's that she is more displeased with inflation."

Financial markets currently predict a 77% chance that the Fed will hold rates steady again at the next FOMC meeting in March, according to CME FedWatch.

Investors see only two rate cuts as likely by the end of the year, despite Trump's nomination of Kevin Warsh to take over as Fed chair in May. Although Warsh has called for lower interest rates, he will have to sway a majority of the FOMC to change policy.

Cook's comments come as she awaits a Supreme Court ruling on Trump's attempt to fire her over allegations of mortgage fraud, in a lawsuit that Powell has called "perhaps the most important legal case in the Fed's 113-year history."

Last month, even Trump-appointed conservative justices sharply questioned Trump's attempt to remove Cook, with Justice Brett Kavanaugh suggesting it could "weaken, if not shatter, the independence of the Federal Reserve."

Trump has made no secret of his desire for radically lower interest rates, and the president's critics say the case against Cook and a separate Justice Department investigation of Powell are part of a pressure campaign to sway rate policy.

Lisa Cook cites growing generational divide in housing

In her speech on Wednesday, Cook cited affordability challenges in the housing market and generational friction between baby boomers and younger Americans as a key factor weighing on consumer sentiment.

"Consumer sentiment, by many measures, is lower than one would expect in a solid economy, and perceptions of job availability have continued to worsen," said Cook.

Cook said that she doesn't dismiss weak sentiment as unfounded, arguing that a slowdown in hiring, uncertainty over the impact of AI, and rising costs for middle-class families were all driving sentiment lower.

"Most notably, housing costs have increased sharply for both homebuyers and renters and have far surpassed wage gains in almost every region of the country," she said.

Cook argued that this trend may feel especially painful in recent years due to the confluence with other economic trends.

"For instance, I think the age distribution of our workforce may make these trends more salient now with young adults competing for housing and jobs with older, wealthier baby boomers," she said.

Cook's remarks signal that the Fed is taking seriously a growing generational divide in the housing market that has increasingly pitted first-time buyers against wealthy boomers.

Last year, the median age of first-time homebuyers rose to an all-time high of 40 years old, suggesting that many younger families are priced out of the housing market.

Although millennials are the largest age cohort in the country, baby boomers accounted for 42% of all homebuyers last year, while millennials dropped to 29% of all buyers.