Back

Fed Official John Williams Says AI-Driven Productivity Impact on Rates Is Unclear

New York Fed President John Williams said policymakers are still assessing whether AI-related productivity gains will meaningfully affect interest rates, inflation, and labor market conditions.

Summary

New York Fed President John Williams said the effect of productivity gains on interest rates and monetary policy remains unclear. He said the impact depends on the nature of the change in trend productivity growth and how long it is expected to last. Williams added that officials are assessing how artificial intelligence could influence inflation and the labor market, two key factors in monetary policy decisions, in remarks reported on May 28.

Terms & Concepts
  • Monetary policy: Central bank actions that influence interest rates, money supply, and financial conditions to manage inflation and employment.
  • Productivity gains: Increases in output per worker or per hour, which can affect economic growth, wages, inflation, and policy expectations.
  • Artificial intelligence: Computer systems used to perform tasks associated with human intelligence, and increasingly examined for their impact on productivity and the economy.