Fed Chair Warns of Global Artificial Intelligence Boom Repercussions

US Federal Reserve Chairman Kevin Warsh reaffirmed his commitment to achieving price stability amid rising energy costs and the investment boom in artificial intelligence, which he described as a shock to the economy. Warsh made these remarks during a panel discussion with IMF Managing Director Kristalina Georgieva on Friday, on the sidelines of the annual meetings of the IMF and the World Bank, which are ongoing for a week in Bangkok. Warsh stated that he is optimistic artificial intelligence will make economies that use it well more productive and wealthier, but warned that the path to achieving this will be extremely difficult, noting that its impact on jobs in the near term remains unknown. He continued by saying he wants people to hear optimism from him, but an optimism accompanied by a serious awareness of the scale of responsibility. He added that people will look back a decade from now and say that what happened was of utmost importance and impact. He added that he treats the macroeconomic implications of this technology with seriousness and responsibility, including the possibility that it may lead to short-term inflation due to increased demand, compared to expectations of a positive supply shock in the long term, as part of his role at the head of the US central bank. Warsh considered that artificial intelligence entails massive economic benefits in the long run, but warned that the road to achieving them will likely be very bumpy. He added that the emergence of this new technology is likely the most significant transformation witnessed by the US and global economy during his lifetime, explaining that AI represents a shock to the economy, alongside escalating violence in the Middle East and other geopolitical tensions, yet it remains a factor disrupting economic activity. Warsh acknowledged that the AI investment boom will drive prices higher in the short term, but stated that there are, in his belief, enormous benefits for the global and US economies in the long run.