Federal Reserve officials have described AI as a potential boost to productivity and economic output while warning that it may also create inflation and financial stability challenges. Lisa D. Cook said AI has transformative potential to raise productivity, but could bring near-term inflation risks and strains for financial stability. Separately, Federal Reserve Bank of Chicago President Austan Goolsbee said stronger hype or expectations around future productivity growth could contribute to inflation and may require the United States and other countries to raise interest rates. He also warned that short-term supply shocks, including oil price increases and supply chain disruptions, could intensify those pressures. The remarks, reported on May 28, broaden the Federal Reserve’s discussion of how AI-driven optimism could support growth while complicating monetary policy.