Fed’s Barr Warns of Uneven Economic Impact from AI Adoption
Federal Reserve Governor Michael Barr highlighted AI's transformative potential during the Singapore FinTech Festival, noting its capacity to reshape economies with divergent outcomes. While AI could enhance productivity through task automation and workflow optimization, Barr cautioned about unpredictable labor market disruptions—citing a New York Fed survey linking AI adoption to reduced hiring plans.
Monetary policy may face new challenges as AI-driven capital investments, particularly in data centers, alter productivity metrics. The Fed's recent rate cuts reflect growing economic uncertainty, though policymakers remain divided on further adjustments. "Trillions in planned AI infrastructure spending could redefine economic fundamentals," Barr observed, stopping short of forecasting near-term policy shifts.
