Fed governor Lisa Cook says she's 'prepared to act' — markets split on hike odds (46–60%)
- Fed Governor Lisa Cook said on August 5 she was prepared to raise interest rates if inflation fails to ease after July’s decision to hold. - Cook said inflation remains “too high,” while market pricing for a September increase ranged from about 46% to roughly 60% across gauges. - The next checkpoint is the Federal Reserve’s September 15-16 meeting, with traders watching incoming inflation, jobs and energy-price data.
Federal Reserve Governor Lisa Cook said on August 5 that she is prepared to support a rate increase if inflation does not begin to ease, keeping pressure on markets that had already been debating whether the central bank could move again as soon as September. Cook spoke less than a week after the Fed left its benchmark rate unchanged at 3.50% to 3.75% at its July meeting, a decision that still drew three dissents in favor of a quarter-point increase. Her remarks added to a run of hawkish signals from policymakers even as futures pricing and other market gauges have pointed to a less settled view of the next move. The split is visible in the numbers: some measures put September hike odds near 60%, others closer to the mid-50s, and at least one market-based reading near 46%. ### What exactly did Cook say in Alaska? Lisa Cook said in Anchorage that inflation remains “too high” and that, if it does not start to cool, “I am prepared to act by raising rates, if necessary,” according to Reuters and CNBC accounts of her speech. Cook also said that price-stability risks currently outweigh employment risks under the Fed’s dual mandate, underscoring that she sees inflation as the more immediate problem. (cnbc.com) Wednesday’s remarks mattered because Cook had voted with the majority at the July 29 meeting to leave rates unchanged. Her comments signaled that the pause was not a commitment to stay on hold, and they aligned her public stance more closely with officials arguing that persistent inflation may still require tighter policy. (cnbc.com) ### Why are traders showing such different odds for September? CME FedWatch says its probabilities are derived from 30-day fed funds futures, while other outlets and market trackers use different contracts, timestamps and methodologies to estimate the odds of a move. That helps explain why public readings have diverged, even when they are all trying to answer the same question about the September meeting. (cnbc.com) Recent reports have put the chance of a September hike at several different levels. CNBC reported in late July that investors were increasingly preparing for a September move as oil prices rose. A Chase note published August 5 said its strategists now expect a 25-basis-point increase in September. Other reports cited probabilities around 56% or about 46%, reflecting a market that has not settled on a single base case. (cmegroup.com) ### What changed after the Fed held rates steady in July? The July 29 decision left the federal funds target range at 3.50% to 3.75%, but the vote was 9-3, with three policymakers favoring a quarter-point hike, according to Chase’s recap of the meeting. Chair Kevin Warsh said after the decision that the Fed would “deliver price stability” and would “not hesitate to act,” language that kept the possibility of another increase alive. (chase.com) Morgan Wealth Management strategists said July’s hold had “lowered the bar” for a September hike because policymakers may want to reinforce inflation-fighting credibility after choosing not to move in July. That argument has circulated alongside concerns that energy costs tied to Iran-related supply disruptions could keep price pressures elevated. (chase.com) ### Why are some investors still not fully buying the hawkish message? CME Group said in its August rates recap that FedWatch pricing now implies one rate hike for the rest of 2026, down from two hikes priced before the July meeting. That shift suggests traders have become less convinced about a more aggressive path even after the Fed’s hawkish rhetoric. (chase.com) Other market commentary has tied the softer pricing to weaker U.S. data and lower oil prices, factors that can reduce the urgency for another increase if they persist. Those cross-currents help explain why Cook’s warning did not produce a single, decisive market view about September. ### What is the next date that matters? The Federal Reserve’s next scheduled policy meeting is September 15-16, according to market trackers covering the 2026 FOMC calendar. (cmegroup.com) Between now and then, traders will be watching inflation readings, labor-market data and energy prices for signs that either support or undercut Cook’s case for another move. (cmegroup.com)
