Waller: Inflation Cools in Recent Weeks, AI Reshapes Economy, Forward Guidance Loses Necessity
Warsh: Inflation Cools in Recent Weeks, AI Reshapes Economy, Forward Guidance Deemed Unnecessary
Federal Reserve Governor Christopher Warsh, speaking at the ECB's annual forum in Sintra, stated that the Fed will no longer provide forward guidance on future interest rate paths. He emphasized that policy decisions will be based on the latest data and discussed at each meeting, rather than pre-committing to a direction.
Warsh noted that U.S. inflation risks have eased over the past four weeks. He highlighted that AI is transforming the economy at an unprecedented pace, potentially expanding supply and productivity, which could allow for faster growth with lower inflation. However, he stressed it remains uncertain whether AI will ultimately be inflationary or disinflationary, and the Fed must assess its impact based on incoming data.
Regarding monetary policy, Warsh reiterated the Fed's independence, stating decisions will not be influenced by external political pressure. He confirmed the intention to continue reducing the size of the Fed's balance sheet, though the process will take time. He also announced that member lists for five new internal working groups, established to review policy frameworks and communication, will be released soon.
marsbit07/02 03:44
