Overview
Federal Reserve Chair Kevin Warsh, speaking at an International Monetary Fund forum in Bangkok, said artificial intelligence is likely to deliver a significant boost to economic productivity over the medium term, describing it as one of the most consequential changes to the U.S. and global economy in his lifetime. He characterized the AI‑driven impact as a positive supply shock that could lift growth, but cautioned that the transition will be "bumpy" and will create uncertainty around employment, market structure and the distribution of benefits across firms.
Policy Implications
Warsh emphasized that policymakers must assess AI’s implications for inflation, productivity and financial stability. He reiterated the Federal Reserve’s commitment to restoring price stability after it removed some monetary‑policy accommodation at its September meeting, but declined to give any forward guidance on the next policy move, stating that the Fed will evaluate developments in output, employment and inflation ahead of its remaining meetings this year.
Broader Economic Context
Warsh noted that persistent inflation remains a common challenge for central banks worldwide, yet policymakers have shown resolve in pursuing price stability despite differing economic conditions. He added that the U.S. economy is benefiting from a substantial investment surge that extends beyond AI, providing additional tailwinds for growth. The global economy, he said, has proved more resilient than expected a few months earlier, even amid ongoing geopolitical tensions and conflicts.
AI Task Force
The Federal Reserve is examining AI’s broader implications through external task forces, including one focused on productivity and jobs. This task force is scheduled to hold its first field hearing in the San Francisco Bay Area on November 16.
Outlook
Warsh concluded that policymakers need to question established assumptions and remain open to new ideas as technological and structural changes reshape the economy.