Federal Reserve Chair Kevin Warsh told the Jackson Hole symposium that the central bank bears full responsibility for inflation running persistently above target over the past roughly 65 months. Market-based inflation expectations remain "well anchored," he said, but need close monitoring to prevent unanchoring. Warsh also flagged AI as a new factor in the economy and monetary policy, with two top AI labs generating over $100 billion in annualized token revenue. He described the labor market as stable with unemployment near 4.1%, while PCE inflation remains around 3.7%, well above the 2% goal.
Federal Reserve Chair Kevin Warsh said at the Jackson Hole symposium that the central bank bears full responsibility for inflation running persistently high over the past roughly 65 months.
Current market-based inflation expectations remain "well anchored" and won't be easily shaken, he said, but they must be closely monitored. The Fed has a duty to prevent inflation expectations from becoming unanchored.
Warsh described artificial intelligence as a new factor of production now influencing the economy and monetary policy. Related capital spending and token sales have surged, with two leading AI labs generating more than $100 billion in annualized token revenue, he noted.
He also said the U.S. labor market is stable, with unemployment around 4.1%. Corporate profits and capital expenditures are strong, and financial conditions can hardly be called "tight." Still, PCE inflation remains around 3.7%, well above the Federal Reserve's 2% target.
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