Federal Reserve Governor Cook: AI productivity dividends are difficult to contain inflation The Federal Reserve may need to further tighten its policies

The Zhitong Finance App learned that Federal Reserve Governor Lisa Cook said in a preparation speech for an event in Oakland, California on Monday that future productivity increases brought about by artificial intelligence may not be enough to offset recent price pressure, and warned that this trend may drive up overall economic inflation. She anticipates that productivity gains in the next few years will have mild anti-inflationary effects, but these effects will not arrive in time to offset the growing inflationary pressure later this year.

Cook said that the Federal Reserve's decision to raise interest rates earlier this month is necessary to deal with high inflation, and future policy actions will be guided by economic data. She pointed out that large-scale investment in data centers has boosted competition for shared resources such as energy and construction labor, and electricity and water costs have risen by about 5% over the past year. With companies spending only a fraction of the $2 trillion promised capital, and the AI-driven rise in stock markets spurring consumer spending, she warned that broader price pressure could gradually unfold.

Cook said AI “is expected to be the most significant technological change in our lives,” but she also cautioned that it is still unclear how quickly this technology will increase overall productivity. “Any estimate of how and when this mechanism will work faces uncertainty and merits further research and discussion,” she said.

Federal Reserve policy makers voted unanimously this month to raise the benchmark interest rate by 25 basis points, and are initially expected to raise interest rates at least once before the end of the year based on median forecasts. Federal Reserve Chairman Kevin Walsh said the move was aimed at removing “a dose of easing” from the economy to push inflation back to the central bank's 2% target. Recently, a series of public statements by officials emphasized that economic momentum continues and the labor market remains strong, providing reasons for further policy tightening. Financial markets have also raised their bets on another rate hike, and federal funds futures show that the probability of raising interest rates in October is about 70%.

Furthermore, Cook said that the labor market seems to be able to cope with interest rate hikes, the unemployment rate is on a downward trend, and other indicators show that the labor market is “roughly balanced and gradually improving.” “The strength of the labor market is also reflected in broader economic growth data, which has maintained significant resilience over the past year,” she said.