US Fed Creates AI Task Force To Guide Future Policy
WASHINGTON, D.C.- The US Federal Reserve has established a task force to examine how artificial intelligence could shape the economy and future monetary policy, with its findings expected by the end of the year, Fed Chair Kevin Warsh said.
Warsh said the central bank was examining AI’s effects on both demand and supply, while decisions on managing the technology’s broader risks and opportunities would remain with other parts of the government.
The announcement came during a news conference following the Federal Open Market Committee’s unanimous decision to raise its benchmark interest rate by a quarter of a percentage point to 3.75-4 per cent.
“I care so much, I think it’s so important, that we established a task force that should report by the end of the year to help us think about the implications on our future policy conjecture,” Warsh said.
The announcement came amid warnings from some AI industry leaders about the technology’s potential economic risks. Warsh did not directly assess those warnings, instead outlining the Federal Reserve’s role in examining AI’s economic effects.
“We care very much about what’s happening in artificial intelligence. We care much about the implications on the demand side of the economy and ultimately on the supply side of the economy.”
“But the policy decisions that are made about the risks and rewards, the challenges and opportunities, those are decisions made by other parts of the government.”
Warsh gave no details about the task force’s membership, its specific research questions or whether its findings would be published. He also offered no estimate of AI’s contribution to economic growth or inflation.
The review comes as the Fed assesses a strengthening US economy, with resilient domestic spending, strong productivity growth and robust capital investment.
Warsh separately identified the surge in capital spending as one reason longer-term US Treasury yields had risen. He said large technology infrastructure operators, often called hyperscalers, were raising funds and increasing competition for capital.
“The surge in capital expenditures, which I referenced in my remarks, is real and the so-called hyperscalers are out in the market raising funding.”
He cited economic strength and geopolitical developments as two other leading factors behind higher yields, while stressing that they were not the only explanations.
The AI review also comes as the Fed faces persistent inflation alongside a labor market that Warsh described as broadly consistent with full employment. He said inflation had remained above the Fed’s target for more than five years.
On the challenge of bringing inflation down while AI was driving economic activity, Warsh said he did not believe the Fed needed to harm employment to achieve its inflation objective.
The Federal Reserve’s longer-run inflation objective is 2 per cent, measured by the annual change in the personal consumption expenditures price index. (IANS)
