Key insights
- Goolsbee's comments suggest the Fed remains vigilant about inflation risks, even with potential AI-driven productivity gains. He highlights the need to monitor for economic overheating if spending increases based on anticipated future wealth. This implies the Fed is unlikely to prematurely ease monetary policy, posing a moderate headwind for equity valuations.
WASHINGTON, May 6 (Reuters) - Even if artificial intelligence is as transformative as advertised the U.S. Federal Reserve would still need to watch for rising inflation, Chicago Fed President Austan Goolsbee said on Wednesday.
"If it’s as good as advertised, it would be lovely, wonderful, it will make us rich," Goolsbee said."But if that’s still to come in the future, I do think we need to be a little more circumspect and on the lookout for overheating" if people start spending on the basis of anticipated wealth gains from productivity to come.