Federal Reserve Governor Lisa Cook said that supply shocks have become more prominent, and their impact is “unexpectedly long-lasting,” testing the traditional approach of the Federal Reserve choosing to ignore such shocks. Cook said at an event hosted by the New York Federal Reserve on Thursday: “The impact of supply shocks is unexpectedly long-lasting, and we have seen more and more supply shocks over the past few years, so they have become more prominent.” “Our traditional view in the past was that we would ignore these supply shocks because tightening monetary policy would not affect oil prices, nor would it affect war,” she said. In a panel discussion with New York Federal Reserve President John Williams, Cook said, “What is likely now is that depending on many different factors, different conclusions may be reached on what is the best policy response.” She said that the Federal Reserve needs to ensure that inflation expectations do not break out of anchor. Cook reiterated that she believes artificial intelligence construction is increasing inflationary pressure, and it is unclear when this technology will bring about an increase in productivity. She said, “I'm worried about when the productivity gains that will cool down inflation will occur, and where the next supply bottleneck will be.”

Federal Reserve Governor Lisa Cook said that supply shocks have become more prominent, and their impact is “unexpectedly long-lasting,” testing the traditional approach of the Federal Reserve choosing to ignore such shocks. Cook said at an event hosted by the New York Federal Reserve on Thursday: “The impact of supply shocks is unexpectedly long-lasting, and we have seen more and more supply shocks over the past few years, so they have become more prominent.” “Our traditional view in the past was that we would ignore these supply shocks because tightening monetary policy would not affect oil prices, nor would it affect war,” she said. In a panel discussion with New York Federal Reserve President John Williams, Cook said, “What is likely now is that depending on many different factors, different conclusions may be reached on what is the best policy response.” She said that the Federal Reserve needs to ensure that inflation expectations do not break out of anchor. Cook reiterated that she believes artificial intelligence construction is increasing inflationary pressure, and it is unclear when this technology will bring about an increase in productivity. She said, “I'm worried about when the productivity gains that will cool down inflation will occur, and where the next supply bottleneck will be.”