for release on delivery 9 : 15 a. m. est january 6, 2025 an assessment of the economy and financial stability remarks by lisa d. cook member board of governors of the federal reserve system at the seventh conference on law and macroeconomics, university of michigan law school ann arbor, michigan january 6, 2025 thank you, dean logue. it is wonderful to be back in my adopted home state of michigan and on the university of michigan ’ s beautiful campus. the fact that you got this georgia native to visit in the first week of january shows you just how much i love it here. but, seriously, the program committee for the university of michigan law school ’ s seventh conference on law and macroeconomics has put together an impressive program. i am grateful for the opportunity to present my views and to learn from all of you. 1 today, i would like to speak about the federal reserve board ’ s work on financial stability. it is a topic that holds special importance to me, because i am the chair of the board of governors ’ committee on financial stability. but before speaking on financial stability, given that it is the beginning of a new year, i thought it would be helpful to share my economic outlook and my views on appropriate monetary policy. overall, the u. s. economy starts the year in good shape. economic growth was quite strong in 2024. inflation has fallen considerably from its peak two and a half years ago, though it remains somewhat above the fed ’ s 2 percent objective. the labor market is solid, with the unemployment rate still relatively low and americans, on average, bringing home paychecks that are growing faster than inflation. my focus, and that of my colleagues on the federal open market committee ( fomc ), is on our dual - mandate goals of price stability and maximum employment. this year, i will continue to work on calibrating monetary policy to ensure inflation returns sustainably to our 2 percent target while maintaining a solid labor market. i will also carefully monitor financial stability risks and vulnerabilities and work with my the views expressed here are my own and not necessarily those of my colleagues on the board of governors or the federal open market committee - 2colleagues at the fed and other agencies to reduce the likelihood that financial stability problems will disrupt the economy. economic activity as i stated, the economy grew at a strong pace recently. gross domestic product expanded at a 3. 1 percent annual rate in the third quarter

market closely, including continuing claims, which have risen in recent months. after a period of elevated job - switching early in the recovery, workers are voluntarily leaving their jobs at lower rates. and the gap between wage growth for job switchers and job stayers has largely gone away. thus, i do not see the labor market as a source of significant inflationary pressure. monetary policy thinking of how the economy has evolved over the past year, at the start of 2024 the federal funds rate was at its highest level in more than two decades, providing notable restraint. over the course of last year, inflation made gradual progress toward our objective, while the labor market gradually cooled. thus, in september, i voted along with my fomc colleagues to reduce the target range for the federal funds rate half a point after maintaining it at a peak of 5 - 1 / 4 to 5 - 1 / 2 percent for more than a year, and we subsequently approved two more quarter - point cuts in november and december. i continue to view the risks to achieving the two sides of the federal reserve's dual mandate of price stability and maximum employment as being roughly in balance. over time, i still think it will likely be appropriate to move the policy rate toward a more neutral stance. however, the 100 basis points of rate cuts since september have notably reduced the restrictiveness of monetary policy. all along, i envisioned moving more quickly in the early stages of our easing campaign and then easing more gradually as the policy rate came closer to neutral. in addition, since september, the labor market has been somewhat more resilient, while inflation has been stickier than i assumed at that time. thus, i think we can afford to proceed more cautiously with further cuts. - 6policy is not on a preset course. the magnitude and timing of future changes to policy rates will depend on incoming data, the evolving outlook, and the balance of risks. my policy decisions will be guided by our dual mandate of stable prices and maximum employment, and i know delivering on those goals will produce the best economic outcomes for all americans. overview of financial stability now, i would like to move from a discussion of monetary policy to a description of the board ’ s work on financial stability. it is a core part of the fed ’ s mission, because a stable financial system provides financing and services to allow households, communities, and businesses to invest, grow, and participate in a well - functioning economy. to begin that