Wall Street has been betting on rate cuts, until a Fed governor said the quiet part out loud.
Lisa Cook, a sitting member of the Federal Reserve's board, said she's ready to raise rates if inflation doesn't ease.
That cuts against the script markets have been following.
Cook said she's prepared to push rates higher if inflation lingers, though she stopped short of committing to a hike or saying one is coming.
She made it clear the option is still on the table.
That marks a shift from the broader Fed tone of recent months, which has leaned toward patience and eventual cuts, suggesting at least one voter on the committee isn't convinced inflation is beat.
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The Fed has been holding rates steady while waiting for clearer data, which markets have read as a green light to price in cuts later this year.
Cook's comments push back on that read, suggesting the next move could go the other way if inflation runs hotter than the Fed expects.
That changes the math for everything from mortgage rates to stock valuations, since higher-for-longer is a different world than rate-cuts-incoming.
Watch the next round of inflation prints, because if PCE (the Fed's preferred inflation gauge) keeps cooling, Cook's comments stay theoretical.
If it ticks back up, one Fed governor's warning suddenly carries weight.
Cook is one voice, but she's a voice with a vote.
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