Rise of AI: “The most decisive change” for the current global economy for the head of the Fed

The president of the American Federal Reserve (Fed) estimated this Friday that the AI ​​boom represented the development with the most serious consequences for the global economy in his lifetime, predicting a positive dynamic but “strewn with pitfalls” that central banks must scrutinize.

“I would say that the advent of this new technology is probably the most decisive change for the American and global economy in my lifetime,” declared Kevin Warsh, on the sidelines of the meetings of the IMF and the World Bank in Bangkok. The rise of artificial intelligence (AI), and the colossal investments it generates, has become the main engine of growth in the world's economy and trade, while causing stock markets to soar on Wall Street and in Asia.

Kevin Warsh explained, in his capacity as central banker, to be attentive to the macroeconomic implications of the AI ​​boom: it could lead to a rise in prices in the short term, via the overheating of demand and investments, but “it will ultimately result in a considerable advantage for the global economy”, he judged. “This will transform the real economy. Although we do not know what the effects will be on employment over the next 12 to 18 months, we can nevertheless assume that this technology will make those economies and nations that can take advantage of it more productive. It will generate more wealth,” he insisted.

However, the International Monetary Fund (IMF) was also concerned this week about the risks associated with the AI ​​boom for the economy and financial stability, in the event of a sudden reversal in market and investment trends against a backdrop of concerns about profits and productivity gains in the sector. Kevin Warsh, speaking this Friday in conversation with IMF Managing Director Kristalina Georgieva, agreed on these potential dangers. “The path will likely be strewn with pitfalls: uncertainties about our very understanding of the technology, but also about the market structure that will ultimately prevail. Who will manage to benefit from it? What are the consequences for those who bet on winnings, but whose hopes come up against realities?” he said.

In terms of monetary policy, the Fed raised its interest rates in mid-September to a range between 3.75% and 4%, to try to curb inflation, but in Bangkok, Kevin Warsh refused to give the slightest indication on the future. “We naturally seek to know what the years 2027 and 2028 have in store for us, but no one has an infallible forecasting capacity,” and the Fed looks at current data at each of its meetings by “looking out the window,” he justified.