Warsh Offers No New Rate Guidance, Announces November AI Hearing
By Jacqueline Policastro | Quincy News Correspondent
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Bangkok (Quincy News) — Federal Reserve Chair Kevin Warsh offered no new guidance on interest rates Friday, saying the U.S. economy remains resilient despite persistent inflation, while announcing a November hearing on how artificial intelligence could reshape productivity and employment.
Speaking in Bangkok during the International Monetary Fund and World Bank annual meetings, Warsh joined IMF Managing Director Kristalina Georgieva for a wide-ranging conversation about the global economy and his first five months leading the central bank.
“Full disclosure, Kristalina and I are old friends,” Warsh said at the outset, joking that he expected “some softballs.”
But investors hoping for clarity on interest rates received little.
“I don’t prejudge meetings,” Warsh said, noting that economic developments since the Fed’s September meeting had “broadly conformed to our expectations.”
The Fed raised its benchmark interest rate by a quarter percentage point in September to a range of 3.75% to 4%. Warsh’s remarks followed another round of key inflation data, including a September consumer price index increase of 3.7% from a year earlier and a 1.3% monthly jump in producer prices.
Warsh said business investment, beyond just AI, is helping the economy grow despite global tensions and high prices.
AI investment and employment
Warsh called artificial intelligence “probably the most consequential change to the U.S. and the global economy in my lifetime.”
He said investment in AI is boosting demand before longer-term productivity gains can increase supply, creating near-term inflation pressures. His comments addressed the challenges facing central bankers as they assess the technology’s effects on prices, employment and economic growth.
“The path from where we are to there is likely to be a very bumpy one,” Warsh said.
Warsh announced that the Fed’s productivity-and-jobs task force will hold its first field hearing Nov. 16 in the San Francisco Bay Area. The hearing will bring outside experts together to examine AI’s implications for employment, productivity and monetary policymaking.
Priorities inside the Fed
Reflecting on his first 148 days as chairman, Warsh praised the Federal Reserve’s employees, saying he was pleasantly surprised by the depth of talent he found after returning to an institution where he previously served as a governor.
He also said he had not given enough attention to the roughly 75% of Fed employees who work outside monetary policy, including those in banking supervision, payment systems and consumer affairs.
Warsh said he would devote more attention to those responsibilities over his next 100 days. He described institutional credibility as the central bank’s greatest strength and credited generations of leaders who preceded him with building it.
Warsh recalled learning from former Fed Chairs Paul Volcker, Alan Greenspan and Ben Bernanke. He praised their willingness to challenge established practices when economic conditions demanded change.
He also recalled meeting Volcker at age 35, when a senator sent him to speak with the former chairman during his nomination process. Warsh joked that, had smartphones existed, he might have asked for a selfie.
Warsh said his predecessors succeeded by adapting the institution to their times.
“They loved the institution enough to be unafraid to challenge it,” he said.
The discussion ended without a signal about Warsh’s preferred action at the Fed’s next policy meeting, scheduled for Oct. 27–28.
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