AI 'most consequential change' to economy: Kevin Warsh

Federal Reserve chair Kevin Warsh declared on Friday that artificial intelligence technology is the most transformative change to the global economy he has witnessed, expecting its impact to be positive despite a challenging journey ahead. Speaking at an IMF-World Bank Annual Meetings event in Bangkok, Warsh emphasized that the advent of this novel technology represents the most consequential shift in the US and global economy during his lifetime.

He approached the macroeconomic implications of the technology with a sober, responsible mindset in his capacity as head of the US central bank, acknowledging both the short-term surge in inflation due to demand-side effects and the anticipated long-term positive supply-side shock. Warsh conceded that the AI investment surge would initially drive prices up, but he firmly believed that the technology would deliver significant benefits to both the global and US economies over time.

He anticipated the Federal Reserve to leverage AI for enhanced data analysis in monetary policy conduct, exemplifying the technology's positive effects. Warsh also reiterated his earlier conviction that the technology would render economies and nations that harness it more productive. However, he cautioned that the path forward was shrouded in uncertainty regarding how markets would evolve around the technology, with a bumpy transition ahead in understanding the tech and market structures of new AI innovations.