Fed's Warsh says AI wealth is coming, but the path will be 'very bumpy'
The Federal Reserve chair told an IMF event in Bangkok that AI will make economies that use it well more productive and wealthier, while its near-term effect on jobs is unknown.
At a glance
- Fed Chair Kevin Warsh said AI will make economies that use it well more productive and wealthier.
- He warned the path will be 'very bumpy' and that AI's near-term effect on jobs is unknown.
- The Fed raised rates to 3.75%-4% last month; its next meeting is Oct. 27-28, with a blackout starting Friday.
Federal Reserve Chairman Kevin Warsh said Friday that artificial intelligence will make economies that use it well more productive and wealthier, but warned that the road there will be "very bumpy" and that the technology's near-term effect on jobs is unknown.
Warsh made the remarks in a fireside chat with International Monetary Fund Managing Director Kristalina Georgieva during the weeklong IMF-World Bank Annual Meetings in Bangkok.
'Optimism leavened by seriousness'
Warsh said he wanted his message to be one of "optimism, but optimism leavened by the seriousness of purpose." A decade from now, he said, people will look back "and say this was hugely consequential."
He said the benefits would go to economies that use the technology well, while cautioning that the transition may be uneven and that its impact on employment in the near term cannot yet be predicted.
Rate decision ahead
The Fed raised rates to a range of 3.75% to 4% last month, its first hike since 2023. A communication blackout period starts later Friday, ahead of the central bank's Oct. 27-28 meeting.
Warsh said the global economy has "broadly conformed" to the central bank's expectations since its September rate increase, but he declined to say what he will do at the coming meeting. "I don't prejudge meetings," he said.
Traders see a 72.3% chance that the Fed will keep the interest rate unchanged, according to CME Fed Watch, while the majority expect a 25 basis point hike at the December meeting.
CNBC described the story as a developing one.
Source: CNBC.
Questions and answers
- What did Kevin Warsh say about artificial intelligence?
- The Federal Reserve chairman said AI will make economies that use it well more productive and wealthier, but warned the path there will be "very bumpy" and its near-term effect on jobs is unknown.
- What did Warsh say about the Fed's next rate decision?
- He declined to say what he will do at the Oct. 27-28 meeting, saying "I don't prejudge meetings." The Fed raised rates to 3.75% to 4% last month, its first hike since 2023.
- What do traders expect the Fed to do with interest rates?
- Traders see a 72.3% chance the Fed keeps the interest rate unchanged, according to CME Fed Watch, while the majority expect a 25 basis point hike at the December meeting.
