AI Will Help in More Rate Cuts in Future New Fed Chief

 

           Image credit Bloomberg 

Kevin Warsh argued that artificial intelligence could open the door for additional Federal Reserve interest-rate cuts by lifting productivity and easing inflationary pressures.

    Warsh has described the AI boom as a significant productivity driver that can lower costs in the economy, allowing the Fed more flexibility to cut interest rates without sparking inflation

He compared AI’s potential impact to earlier productivity surges such as the technology boom of the 1990s arguing that these structural improvements could help contain inflation and allow for lower interest rates.

Some reports say he has explicitly portrayed AI-driven productivity gains as creating room for more aggressive rate cuts, since higher efficiency is less likely to fuel inflation than traditional growth cycles

.The new Fed leadership could be good for the economy.