What's Happening? Fed Cook Warns of Global Market Risks


 Rising geopolitical tensions around the world are expected to worsen already sluggish growth in Europe and China, and the side effects could change the course of the US economy, Federal Governor Lisa Cook said on Wednesday.

"Obviously what's happening around the world has had an impact on the US and at the moment economic growth is quite subdued among major trading partners," Cook said during a panel discussion session at a conference organized by the Central Bank of Ireland in Dublin.

Cook added that geopolitical tensions could be factors that could undermine commodity markets and access to credit in a higher interest rate environment.

"Any shake-up could make the existing situation worse and could threaten commodity markets and the credit system," said Cook.

Cook's comments followed a speech that detailed several international risks, including conflicts in Ukraine and the Middle East, as well as continued inflationary pressures abroad and a further economic slowdown in China, which could threaten global financial stability.

Much of his speech was a repeat of a speech on Monday, in which he described a more resilient financial sector, which is in better shape than it was in the mid-2000s. This is despite exposure to a number of risks including from non-bank financial institutions and from devaluation of commercial real estate, and a stronger household sector.

Cook recently detailed some of the risks from abroad, including the potential for unexpected political interest rate hikes if inflationary pressures persist, the regional impact if China's economic slowdown worsens, and the potential for increased tensions in Russia, the Middle East, and China. which may pose a risk to the global market.