(March 27): US Federal Reserve (Fed) governor Lisa Cook said the Iran war has shifted the balance of risks for now, leaving inflation as a bigger concern for policymakers than employment.
“I would argue that the inflation risk is greater right now as a result of the Iran war,” Cook said on Thursday while answering questions after a speech in New Haven, Connecticut. “With respect to the labour market, I see it as being in balance, but precariously so.”
The US central bank left interest rates unchanged after its March 17-18 policy meeting, and noted elevated uncertainty created by the war. It’s trying to balance inflation, which was about a percentage point above its 2% target in January and is set to climb further on the back of a surge in oil prices, against a labour market that has seen very little hiring over the past year.
Cook said tariffs had already moved inflation away from the Fed’s target, and that the Middle East situation could potentially have a substantial effect also.
“We could be at this for much longer than we anticipated,” Cook said. “So I think right now, the balance of risks has shifted more to inflation.”
Uploaded by Isabelle Francis
