Jackson Hole Economic Symposium
Member of the Board of Governors of the Federal Reserve System Lisa D. Cook attends a dinner program at Grand Teton National Park where financial leaders from around the world are gathering for the Jackson Hole Economic Symposium outside Jackson, Wyoming, U. Reuters

Federal Reserve Governor Lisa Cook said on Wednesday it could soon be time for the U.S. central bank to take its foot off the gas when it comes to its efforts to lower high levels of inflation.

"Inflation remains much too high" and "as a result, the Federal Reserve must continue to focus on bringing inflation back down to our 2% target," Cook said in prepared remarks for a speech to the Detroit Economic Club.

That said, Cook pointed to very aggressive Fed interest rate rises over this year as giving the central bank some space to slow down and take stock of how its policy actions are impacting the economy.

"Given the tightening already in the pipeline, I am mindful that monetary policy works with long lags," she said. As the Fed moves toward an "uncertain" stopping point for its rate rises, "it would be prudent to move in smaller steps," she said, adding that "how far we go, and how long we keep rates restrictive, will depend on observed progress in bringing down inflation."

Cook was speaking two weeks before the Fed is due to release its next policy statement. The central bank has moved its short-term target rate up swiftly this year, from the near-zero level in March to the current 3.75%-4.00% range. Beginning in the summer, those increases have come in historically aggressive 75-basis-point increments.

But Fed officials have said in recent comments and other communications that, as they near a final destination for rate rises, it would be a good idea to slow down. Futures markets are currently pricing a half-percentage-point rate hike at the Dec. 13-14 policy meeting, and Fed officials so far have not pushed back against that prospect.

In her remarks, Cook, one of the Fed's newest governors, said "we have begun to see some improvement in the inflation data," though she added that she "would be cautious about reading too much into one month of relatively favorable data" before deciding the high price pressures that have driven the Fed to act are abating.

Cook said the current pace of wage gains is above levels consistent with the Fed's 2% inflation target. She also said U.S. productivity levels are weak but she hopes they will improve over time, and that the U.S. manufacturing sector is healthy.