By Megan Leonhardt

Federal Reserve Gov. Lisa Cook on Wednesday said that progress on bringing down inflation appears to have stalled out, stressing the importance of the central bank remaining focused on bringing down price growth.

In prepared remarks for an event at the Economic Club of Miami, Cook said that she still sees risks as "tilted" toward higher inflation. She pointed out that the latest data indicates that the personal consumption expenditures price index, the Fed's preferred inflation gauge, rose 2.9% year over year in December. Core PCE inflation, which excludes food and energy costs is projected to have risen 3%.

"Those readings indicate that progress on inflation essentially stalled in 2025," Cook said. "Such a plateau is frustrating after seeing significant disinflation in the preceding few years."

While Cook says there is an argument for being optimistic about the path of inflation, until she sees stronger evidence that inflation is moving sustainably back down to Fed's 2% target, rate policy must be focused on achieving that outcome.

"As I have said before but cannot repeat too many times, the FOMC's firm commitment to its inflation mandate is imperative," Cook said. "After nearly five years of above-target inflation, it is essential that we maintain our credibility by returning to a disinflationary path and achieving our target in the relatively near future."

Cook added that the Fed officials have vowed to bring inflation back down and the public's belief that the central bank would achieve this has kept inflation expectations anchored. "If we were to lose credibility, the cost may not be immediately felt, but it would be resoundingly and painfully felt when we need it the most, in an inflation crisis such as the one we experienced three years ago."

Inflation expectations have remained fairly well-anchored over the past year. In fact, measures of consumers' year-ahead inflation expectations have fallen back since peaking last spring, and longer-run inflation expectations have continued to be relatively stable, Cook acknowledged. But she believes the risks still remain. "I am watching the clock here -- the longer inflation remains above target, the greater the probability that higher inflation will become entrenched in expectations, " she said

Write to Megan Leonhardt at megan.leonhardt@barrons.com

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February 04, 2026 18:30 ET (23:30 GMT)

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