Fed Chair Warsh: AI is the most consequential economic change of my lifetime
Federal Reserve Chairman Kevin Warsh said at an IMF event in Bangkok, in conversation with IMF Managing Director Kristalina Georgieva, that AI is the most consequential economic change in his lifetime and, over the medium term, a positive supply shock. He said AI's demand-side effects will show up before supply-side gains, pushing inflation up in the short run before delivering large long-run benefits, and warned the path there is likely to be "very bumpy" given uncertainty about the technology and how its market structure will evolve. Warsh also said the Fed's productivity and employment working group will hold a field hearing in the San Francisco Bay Area on Nov. 16 covering topics including AI's economic impact, and that the Fed has dropped forward guidance; after his remarks, market-implied odds of an October rate hike fell from about 27% to about 15%.
It is the Fed chair's public framing of AI's macroeconomic effects, plus timing signals for policy and for the Fed's AI hearing.