Fed's Warsh says AI path bumpy but ultimately good for wealth

Federal Reserve Chairman Kevin Warsh said artificial intelligence could ultimately make economies that deploy it effectively more productive and wealthier, but cautioned that the transition will be very bumpy and its near-term impact on employment remains uncertain. Speaking Friday at a fireside chat with International Monetary Fund Managing Director Kristalina Georgieva during the IMF-World Bank Annual Meetings in Bangkok, Warsh urged optimism tempered by caution, saying the public should hear hope leavened by a serious sense of purpose. He added that a decade from now, people are likely to view the AI shift as a hugely consequential development. Warsh’s remarks came as the Fed enters a communication blackout ahead of its Oct. 27-28 policy meeting. The central bank raised rates last month to a range of 3.75% to 4%, its first increase since 2023. He declined to indicate whether another move is coming, saying he does not prejudge meetings. He also said the global economy has broadly conformed to Fed expectations since the September rate increase. Markets currently see a 72.3% chance the Fed will hold rates steady at its next meeting, according to CME FedWatch, while a majority of traders expect a 25 basis point hike by December.