Fed Governor Warns AI May Raise Unemployment and Complicate Monetary Policy

Federal Reserve Governor Lisa Cook stated that artificial intelligence is causing a significant shift in the U.S. labor market, potentially leading to a short-term rise in unemployment that monetary policy may struggle to address without increasing inflation. She emphasized that while AI offers new opportunities, initial job displacement could occur, and non-monetary policies like education and workforce development may better manage these challenges. Cook also noted uncertainty about AI's impact on interest rates, which could fluctuate depending on technology investment and income distribution effects.