Fed Warsh: US Economy Has ‘Plenty of Tailwinds’
Federal Reserve Chair Kevin Warsh said on Friday that the United States is enjoying fed warsh economic tailwinds powered by a broadening surge of investment that stretches well beyond artificial intelligence — even as he refused to give any signal on the central bank’s October interest-rate decision.
Speaking in a fireside chat with International Monetary Fund Managing Director Kristalina Georgieva at the IMF–World Bank Annual Meetings in Bangkok, Warsh said the investment boom was giving the American economy unusual strength and durability. He said the economy had “plenty of tailwinds” behind it, and that the momentum was not shared everywhere in the world.
AI: The ‘Most Consequential’ Shift of His Lifetime
Warsh described the arrival of artificial intelligence as probably the most consequential change to the US and global economy in his lifetime, calling it a long-term positive supply shock for growth. He cautioned, though, that the road ahead would be “very bumpy,” with the technology’s near-term effect on jobs still unclear.
He added that the AI investment boom is lifting prices in the short term through demand-side effects, even as it promises long-run supply-side gains — a tension central bankers are watching closely.
No Signal on the October Rate Decision
Warsh, who took over as Fed chair in May, said he was “not going to prejudge” what the Federal Open Market Committee would do at its October 27–28 meeting.
The stance leaves intact market expectations that the Fed will hold rates steady this month after raising its benchmark to 3.75%–4% in September — its first hike in three years — with traders now pricing in another increase in December.
Surprised by Global Resilience
Warsh said the global economy had shown a resilience he would not have predicted five or six months ago, despite geopolitical shocks. He added that since the Fed’s September decision, the world had broadly conformed to the central bank’s expectations, and said he was optimistic the United States would emerge with a stronger, more durable economy.
Source: Reuters