Fed's Cook: Tariffs could lead to stagflation environment

Federal Reserve (Fed) Board of Governors member Lisa D. Cook noted on Tuesday that although the US economy appears to be in a healthy place for the time being, the biggest economic threat to stability remains the Trump administration's trade policies.

Key highlights

The Fed's monetary policy is well-positioned for a range of scenarios.

Trade policies create risks for Fed inflation and job mandates.

Trade policy may make it harder to get inflation lower.

Cook sees evidence trade policy is now affecting the economy.

The economy is in a solid position amid trade policy risks.

Cook anticipates economic growth will slow this year.

Firms may be more willing to raise prices now relative to past.

Cook expects increased inflation and reduced activity because of tariffs.

Cook warns tariffs could lead to stagflation environment.

I see challenges to Fed mandates from tariffs but we need to see how it plays out.