Economists Reject AI Rate Cut Claim

What happened

FT-Booth Survey economists rejected Kevin Warsh's claim that an AI boom will enable interest rate cuts. Warsh, a former Federal Reserve candidate, asserted AI's productivity gains would drive this policy shift. Survey participants expressed widespread scepticism regarding AI's immediate economic impact, directly contradicting Warsh's forecast for monetary policy.

Why it matters

Investors and founders face increased uncertainty. Economists' scepticism about AI's immediate productivity impact directly challenges assumptions driving monetary policy forecasts. This contradicts claims of AI-driven economic transformation, impacting investment strategies. Therefore, long-term capital allocation planning becomes more complex. This follows recent debates on AI's economic impact, including "AI Boosts US Productivity" and "AI Boom: Bubble or Breakthrough?".