- Cook focused on AI’s potential to boost the economy, while Waller explored practical applications of AI within the Fed’s own systems.
- Cook cited early signs of declining demand for certain roles, such as coding, and an increase in unemployment among recent graduates.
- Waller said that the U.S. central bank is rapidly weaving artificial intelligence into its internal operations.
Federal Reserve Governors Lisa D. Cook and Christopher J. Waller on Tuesday highlighted how artificial intelligence is reshaping both productivity and central banking operations.
Speaking in separate addresses, Cook focused on AI’s potential to enhance economic efficiency, while Waller explored practical applications of AI within the Fed’s own systems.
Impact on Productivity
According to Cook, AI could drive gains in productivity across multiple sectors, but it also introduces challenges for labor markets and income distribution. The governor emphasized that policy must carefully balance innovation with societal equity.
“As such, our normal demand-side monetary policy may not be able to ameliorate an AI-caused unemployment spell without also increasing inflationary pressure.”
-Lisa D. Cook, Governor, U.S. Federal Reserve
She cited early signs of declining demand for certain roles, such as coding, and increased unemployment among recent graduates, illustrating the early stages of a labor-market transition. She warned that job displacement may precede job creation, echoing economist Joseph Schumpeter’s concept of creative destruction.
Additionally, she discussed how AI-driven investment in data centers and chip production might temporarily raise the neutral interest rate, but long-term effects remain uncertain, particularly if productivity gains alter income distribution.
Beyond Interest Rates
Waller said that the U.S. central bank is rapidly weaving artificial intelligence into its internal operations as technological change gains steam across the financial system.
He noted that while the public often associates the Fed with rate decisions and inflation, much of its daily workload involves payments processing, technology infrastructure, financial management, and services for the U.S. Treasury. As those functions become more interconnected and digital, he said, a bank-by-bank technology model no longer suffices.
“As a public institution with an important role in the U.S. and global financial systems, the Fed must keep pace to deliver effective, reliable services alongside the private sector.”
-Christopher J. Waller, Governor, U.S. Federal Reserve
Waller explained that the Fed is rolling out AI in three primary ways: broad access tools for employees, coding assistants for developers, and embedded features within enterprise software. The governor also cautioned that adopting AI in a central banking environment requires strict oversight.
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