Fed's Lisa Cook Says Inflation Is Still Too Hot — And A 'K-Shaped' Economy Is Leaving Low-Income Americans Behind - Invesco QQQ Trust, Series 1 (NASDAQ:QQQ), State Street SPDR S&P 500 ETF Trust (ARCA:

Core Insights - Federal Reserve Governor Lisa Cook advocates for a cautious "wait and see" approach to monetary policy, indicating current interest rates are "mildly restrictive" and expressing concern over a "K-shaped" economic divergence affecting low-income families [1][4]. Policy Pause And Inflation Hurdles - Cook supports the FOMC's decision to maintain the policy rate, noting significant disinflation from 2022 to 2024, but progress stalled in 2025, with PCE inflation estimated at 2.9%, above the Fed's 2% target [2]. - Recent price pressures are attributed to a "notable uptick" in core goods prices due to last year's tariff increases, emphasizing the need for stronger evidence of sustainable inflation reduction [3]. The 'Two-Speed' Economy - Despite a solid GDP growth of 4.4% in Q3 2025, Cook warns of a disconnect between macroeconomic data and the experiences of vulnerable households, highlighting a "two-speed" economy where higher-income spending is robust while low- and moderate-income families face rising delinquencies [4]. - The rising costs of housing, healthcare, and childcare have contributed to lower consumer sentiment than typical for a "solid" economy [5]. Looking Ahead - Cook acknowledges risks to the labor market, with unemployment at 4.4% in December, but remains optimistic about AI's potential to boost productivity and real wages, while currently viewing risks as tilted toward higher inflation [6]. Market Expectations - The CME Group's FedWatch tool indicates a 90.1% likelihood of the Federal Reserve keeping interest rates unchanged in March, with mixed performance in benchmark indices for 2026 [7].