Kevin Warsh did not reveal whether the Federal Reserve would raise interest rates again at its meeting on October 27th to 28th.
According to Warsh, artificial intelligence is one of the most important changes facing the United States and the global economy. He warned that the adoption process of AI may be "very bumpy," and its short-term impact on employment remains uncertain.
On October 16, during the annual meetings of the International Monetary Fund and the World Bank held in Bangkok, Federal Reserve Chairman Kevin Warsh stated that he would not give any hints regarding whether the Federal Reserve would raise interest rates again at its meeting on October 27-28. Following the interest rate hike in September, this statement continued to maintain uncertainty in the market.
At the same time, Warsh also warns that artificial intelligence may transform the global economy, but its short-term impacts will be difficult to manage.
Warsh Refuses to Send a Signal on the October Interest Rate Decision
In a fireside chat with the Managing Director of the International Monetary Fund, Kristalina Georgieva, Warsh stated that the Federal Reserve will decide on its next steps based on the economic conditions at each meeting.
"I won't make any pre-judgments about the meetings. I don't think it's appropriate to say now what I might do in the remaining meetings this year."
He also made it clear that the Federal Reserve would not send out signals regarding interest rate decisions in advance.
"This is a new chapter for the Federal Reserve; we won't be doing that kind of thing anymore."
The interest rate hike in September was aimed at continuing to focus on inflation.
Further commenting on the Federal Reserve's decision to raise interest rates by 25 basis points in September, raising the target range to 3.75% to 4%, Warsh stated that policymakers need to reduce monetary support in order to curb inflation.
Although Kevin Warsh did not reveal any clues about the Fed's next move, data from CME FedWatch shows that traders are betting at 87.3% probability that the Fed will keep interest rates unchanged at its October meeting.
Warsh Warning: AI Growth may be "very bumpy"
In addition to interest rates, Warsh also describes artificial intelligence as "possibly the most influential change I have ever seen in the United States and the global economy."
He said that this technology could make the economy more productive and wealthier, but he also warned that this transition would not proceed smoothly.
"What I hope you to hear from me is optimism, but this optimism must be based on a serious attitude."
He stated that AI can make the economy more productive and wealthier, but the transition process will be “very bumpy.”
Its short-term impact on employment remains uncertain, while the increased investment in AI infrastructure may also bring price pressures.
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