Federal Reserve Governor Lisa Cook said inflation could remain under pressure in the coming months as the artificial-intelligence buildout and higher oil prices add to costs across the U.S. economy. Speaking at a conference on AI and emerging technology in Oakland, California, Cook said total inflation was about 3.8% in the 12 months through August, compared with the Fed’s 2% target. She also said the labor market appeared able to withstand higher interest rates, while stopping short of committing to another increase.
Reuters reported that Cook expects AI-related demand, oil costs and supply-chain disruption linked to the Middle East conflict to keep inflation elevated. The Wall Street Journal said she pointed to sharp increases in prices for chips, computers and software, describing them as evidence of demand shifting toward AI-focused sectors. Cook also sees a broader channel through construction labor and energy, resources used across the economy rather than only by technology companies.
The remarks followed the Federal Reserve’s first policy-rate increase in three years earlier in September. Cook supported that unanimous decision, which was intended to return inflation to the 2% goal more quickly. Fed policymakers have projected one additional increase before the end of 2026, although Cook said the number and size of future adjustments would depend on how the economy responds to the latest move and on inflation and labor-market data in the months ahead.
Cook drew a distinction between AI’s near-term and medium-term effects. She expects productivity improvements from the technology eventually to reduce some inflation pressure, but said those gains are unlikely to arrive quickly enough to offset this year’s cost increases. She also said she has seen little evidence so far that AI is reshaping the structure of the labor market, while remaining alert to the possibility that the transition could temporarily lift unemployment. In that situation, the Fed could have limited room to respond with lower rates if inflation remained elevated.
What it means for traders: Cook’s comments keep the U.S. rate outlook tied to incoming evidence rather than establish a fixed path. For EUR/USD, data showing persistent inflation or continued labor-market resilience would support the case for tighter U.S. policy, while a clearer slowdown in either measure could weaken that case. The remarks also identify energy prices and AI-related demand as separate inflation channels, giving traders more than the usual consumer-price and employment releases to monitor when assessing the dollar’s interest-rate backdrop.
The next signals will come from inflation and labor data, along with evidence of how the economy absorbs September’s rate increase. Traders will also watch whether oil prices and Middle East supply disruptions continue to feed into broader costs, and whether AI-related price pressure remains concentrated in technology goods or spreads further through energy, construction and other sectors. Cook’s formulation leaves both the timing and magnitude of any further move open, with the Fed’s reaction set to depend on the data rather than a pre-announced sequence.