Lisa Cook, female, professor of economics at Michigan State University and former White House economist. The current first black female director of the Federal Reserve.

Cook said on Monday (January 6) that given the robust economy and a more stable inflation rate than previously expected, the Federal Reserve may be cautious about any further interest rate cuts.

In his speech at the University of Michigan Law School, Cook said that since the Federal Reserve began lowering its benchmark policy rate in September last year, "the elasticity of the labor market has increased, and inflation is more sticky than I imagined at the time." "Therefore, I believe we can be more cautious in making further cuts

The Federal Reserve lowered its policy rate by a full percentage point at its three meetings in 2024, but it is expected that the policy rate will remain within the current range of 4.25% to 4.5% at the next meeting on January 28-29.

Cook said that over time, I still believe that shifting policy rates towards a more neutral stance may be appropriate. However, the cuts so far have significantly reduced the restrictive nature of monetary policy. I have always envisioned taking faster action in the early stages of our relaxation movement, and then gradually relaxing as policy rates approach neutrality

Cook said she thinks the United States has had a "good start" to the year, with historically low unemployment rates and inflation "gradually, if unevenly, returning to our 2% target in a sustainable way over time

The key measure of inflation has made little progress in the second half of 2024 and remains about half a percentage point or more above the Federal Reserve's target.

The employment figures for December will be released this Friday, providing the latest insights on employment and wage growth.

Cook spent most of her speech discussing her views on financial stability and stating that she believes the financial system is "sound and resilient".

But she pointed out some areas that deserve close attention, including the growth of private loans, where sometimes unfamiliar connections between lenders may have an impact on the entire financial system during a crisis.

She added that the growth of artificial intelligence tools may be a source of innovation in the financial system, but if models have common biases or make similar mistakes, it is also a source of risk.

Chris Williamson, Chief Business Economist for Global Market Intelligence at S&P, stated that in the last month of 2024, the service industry saw a significant increase in business activity due to an increase in orders and rising optimism about the outlook for the coming year. The improvement in the performance of the service industry has offset the continued drag of the manufacturing industry on the economy, which means that after a GDP growth of 3.1% in the third quarter, the economy will once again expand strongly in the fourth quarter. The strong service sector PMI in December has set a good start for the US economy in 2025. Given such strong growth, it is understandable that policymakers are adopting a more cautious attitude towards interest rate cuts. However, a key focus in the coming months will be the potential vulnerability of the economy to any significant changes in the interest rate outlook, especially considering the expected further decline in interest rates, financial services activity has been an important engine of economic growth until the end of 2024.