Fed's Warsh says AI path will be 'very bumpy' but ultimately 'very good' for wealth

Federal Reserve Chairman Kevin Warsh stated that artificial intelligence will ultimately make economies more productive and wealthier, although he warned the transition will be "very bumpy" and the near-term impact on jobs remains unknown. Warsh made these remarks during a fireside chat with International Monetary Fund managing director Kristalina Georgieva at the IMF-World Bank Annual Meetings in Bangkok on Friday.

Warsh told the audience he wanted to convey optimism tempered by serious intent. He predicted that a decade from now, observers would look back and describe the period as "hugely consequential."

The comments came after the Fed raised interest rates to a range of 3.75% to 4% last month, marking its first hike since 2023. A communication blackout period begins later Friday ahead of the October 27-28 meeting. Warsh noted that the global economy has "broadly conformed" to central bank expectations since the September rate increase, but he declined to preview his actions at the upcoming gathering. "I don't prejudge meetings," he said.

Market data from CME Fed Watch indicates traders see a 72.3% chance the Fed will keep interest rates unchanged at the next meeting. The majority of traders expect a 25 basis point hike at the December meeting.