Advocates of a further rate increase argue that Cook’s warning is a necessary signal to keep inflation expectations anchored. When price growth stays above the 2% goal, households and businesses may begin to expect higher costs, which can embed inflation into wage contracts and spending habits. A pre‑emptive hike would reinforce the Fed’s credibility, showing that it will not tolerate prolonged overshoot.
From a financial‑stability perspective, higher rates can temper excess borrowing and curb asset‑price bubbles that often follow prolonged cheap credit. Singapore’s banks, many of which fund operations through U.S. dollar markets, would benefit from a clearer rate path, reducing uncertainty around funding costs.
A modest increase also buys time for the economy to adjust without a sudden shock. By nudging rates up gradually, the Fed can slow inflation without sharply curbing growth, giving businesses a predictable environment for investment planning.
Finally, a decisive move could protect savers, whose real returns erode when inflation outpaces interest earnings. In a region where many households hold dollar‑linked deposits, a higher Fed rate helps preserve purchasing power.
Overall, supporters see Cook’s stance as a prudent step to ensure long‑term price stability while minimizing the risk of a delayed, more aggressive tightening later in the year.