Fed Governor Bostic: AI will reshape economic prospects, but where it ultimately leads remains a mystery.

Federal Reserve Governor Michael Ban said on Wednesday in a speech prepared for the Singapore FinTech Festival that while artificial intelligence will change the economy, there are multiple possible outcomes for its specific evolution. Ban outlined two basic scenarios: the first is using generative artificial intelligence to enhance existing tasks and roles, and the second is creating transformative impacts, fundamentally changing work and leisure patterns, improving efficiency, and reshaping businesses with new commercial models. "Currently, it is difficult to predict which scenario (or some intermediate scenario) will become reality," he said. After a sharp slowdown in summer hiring, Federal Reserve officials have decided to lower the benchmark interest rate at the last two policy meetings. Recent public comments show that there is a division among them on whether a third rate cut will be needed in December, though futures data show investors betting on a rate cut. Ban cited survey results in his speech indicating that artificial intelligence has led employers to scale back hiring planshe further elaborated that this trend may be slowing down the pace of job creation, but did not directly comment on the near-term prospects for monetary policy. He also pointed out that the trillions of dollars in capital investment planned for data centers could drive significant economic changes, including productivity gains. Ban stated, "Capital investment typically boosts labor productivity and creates conditions for higher output growth in the long run while avoiding upward pressure on inflation. As I have discussed in previous speeches, if these transformations are significant, they could also impact the implementation of monetary policy."