Kevin Warsh Has No Good Reason to Lower Rates: Bill Dudley

Kevin Warsh, the prospective chair of the US Federal Reserve, keeps coming up with new reasons to lower short-term interest rates, an outcome that President Donald Trump has long demanded.

His latest rationale — that inflationary pressures are subsiding — is no more convincing than its predecessors.

Reason number one was artificial intelligence. The technology, Warsh argued, will at some point push down inflation by enhancing workers’ productivity, so the Fed should get ahead of the curve by lowering rates now. Yet the AI investment boom has so far had the opposite effect, turbocharging demand for everything from construction workers ...