Kevin Warsh, the Federal Reserve chairman appointed by President Donald Trump, is preparing for his first interest-rate decision with a notably more cautious stance on the disinflationary power of artificial intelligence than he previously held.
The shift in rhetoric marks a departure from his earlier public comments, where he argued that AI-driven productivity gains would swiftly lower inflation and allow for lower policy rates.
Now, as he faces the reality of persistent price pressures and geopolitical friction, Warsh is signaling that the hoped-for deflationary impact of technology will not arrive in time to influence the immediate policy path.
This recalibration is significant for markets that had begun to price in a faster easing cycle based on the assumption that AI would act as a powerful disinflationary force.
By tempering these expectations, Warsh is effectively telling investors that the Fed’s primary focus remains on traditional inflation metrics rather than structural technological shifts.
The central bank’s priority is clear: maintaining price stability in an environment where inflation has proven stickier than anticipated.