Warsh signals steady Fed outlook despite inflation jump
Summary
Federal Reserve chairman Kevin Warsh said the economy has generally matched expectations since the last interest rate increase in September. He did not say if the Fed will raise rates again in October, but noted inflation is rising and that artificial intelligence (AI) is boosting investment and economic growth.Key Facts
- The Fed raised interest rates in September to fight inflation driven partly by the Iran war.
- Warsh spoke at the IMF and World Bank meetings, saying the economy is acting as the Fed expected.
- He did not indicate if the Fed will raise rates again at the next meeting on October 27-28.
- Inflation accelerated in September, especially in services prices, increasing chances of a rate hike.
- AI is causing a big increase in spending and investment in the U.S. economy.
- Warsh believes AI could improve productivity and wealth but expects a difficult adjustment period.
- The Fed will hold a hearing on November 16 to study how AI and technology affect jobs and productivity.
- Warsh has launched several Fed task forces to improve how monetary policy responds to today’s economy.
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