Warsh Warns Inflation Still a Concern, AI Looms Large for US Economy

Federal Reserve Chair Kevin Warsh emphasized that inflation remains too high and pledged to maintain monetary policy focused on restoring price stability. In his speech at the Jackson Hole Economic Policy Symposium, Warsh stated that if underlying inflation is not moving towards target clearly and fast enough, there is still work to be done.

Warsh noted that while this summer's personal consumption expenditures index (PCE) and consumer price index (CPI) came in better than expected, it was not enough to conclude that price trends have improved in a meaningful way. He underscored lingering concerns about the inflation backdrop.

Warsh also highlighted the potential impact of artificial intelligence on the U.S. economy, stating that AI is a new variable and potentially a new factor of production that will affect both the economy and the conduct of monetary policy. The Fed estimates that more than half of this year's increase in corporate capital spending stemmed from AI-related infrastructure build-outs.