AI Is No Excuse for the Fed to Cut Interest Rates: Bill Dudley

Will the miracle of artificial intelligence clear a path for the Federal Reserve to deliver the interest-rate cuts that President Donald Trump keeps demanding? Treasury Secretary Scott Bessent and presumptive future Fed Chair Kevin Warsh appear to think so.

I doubt most members of the policymaking Federal Open Market Committee will agree.

As Bessent and Warsh see it, AI will make workers more productive, increasing the economy’s capacity to grow without stoking inflation. The Fed, they argue, should anticipate this phenomenon by lowering interest rates now, instead of relying on forecasting models trained on data from a time when AI didn’t ...