Fed Chair Walsh says AI poses policy challenges for inflation and jobs

Federal Reserve Chair Walsh has said artificial intelligence presents challenges for policymakers as officials assess its effects on inflation and the labor market. That discussion is now widening on Capitol Hill, where Senate Banking Committee Chair Tim Scott said he wants Federal Reserve Chairman Kevin Warsh to address the growth of AI-related data centers, including whether they are paying their own way for electricity and water use. Warsh is set to appear before the Senate Banking Committee on Wednesday for the first time since becoming Fed chairman, after testifying before the House Financial Services Committee on Tuesday as part of the Fed’s semiannual monetary policy report to Congress. Scott framed the issue as both a domestic infrastructure question and a strategic competition issue, saying the U.S. must address local strains tied to AI expansion if it wants to compete with China.