Fed's Warsh Seeks AI Task Force as FOMC Lifts Rates to 3.75-4%
Fed Chair Kevin Warsh called for a task force on AI's monetary policy implications after the FOMC raised rates by 25 basis points to 3.75-4%.
US Federal Reserve Chair Kevin Warsh has proposed setting up a task force to examine how artificial intelligence could shape the central bank's future monetary policy, with a report due by the end of the year.
Speaking at a press conference following the Federal Open Market Committee's latest meeting, Warsh said AI could carry significant consequences for both the demand and supply sides of the economy. He described the panel as important for helping policymakers think through the implications for future policy.
Warsh drew a line between the Fed's remit and broader governance questions. Decisions on the risks, rewards, challenges and opportunities thrown up by AI, he said, rest with other parts of the government, and he would leave those political and policy choices to them. The central bank's focus, he added, would stay on what AI means for monetary policy.
The remarks came after the FOMC unanimously raised the federal funds target range by 25 basis points to 3.75-4 per cent, pointing to elevated inflation and continued economic strength. Warsh said recent inflation readings had not improved enough and that the Fed remained committed to its 2 per cent objective, adding that inflation is too high and has been for too long.
He argued that price stability carries particular benefits for the least well-off, describing them as people who generally do not own financial assets, hold home equity or have 401(k) plans and instead depend on regular paycheques.
On the economy, Warsh pointed to resilient domestic spending, strong productivity growth and robust capital investment. Unemployment stands at around 4.1 per cent, while the Fed's median projections put real GDP growth at 2.3 per cent this year and 2.4 per cent next year. The same projections place total PCE inflation at 3.7 per cent this year and 2.3 per cent next year, with the federal funds rate seen at 4.1 per cent at the end of both this year and next.
Warsh said the Fed would keep assessing economic developments rather than prejudge its next moves, and that he did not see a need to weaken the labour market to bring inflation down, arguing price stability can support more durable growth.