Fed's Cook ready to raise rates if inflation doesn't start easing

The risks to the inflation side of the Fed's mandate are higher than the risks to its job market goal, Cook said. If the Fed needed to raise rates to tackle strong price pressures, Cook said she would weigh how that potential action would affect the overall economy, noting “I would support an increase, if it becomes necessary, to bring inflation down. It may not.”

Cook also said the Fed is running out of space to deal with inflation given how long it has overshot the 2% target. As measured by the personal consumption expenditures price index, inflation in June versus the same month a year before stood at 3.7%.

Cook warned "Inflation may become entrenched in price- and wage-setting behavior, leading to persistence that would be much harder for us to attack,” adding, “while we might be able to afford to wait for longer in a different environment, we do not have that luxury in this one.”