Fed says U.S. economy not running too hot amid AI investment demand
The Federal Reserve is keeping rates steady as officials assess whether strong investment trends are adding inflation pressure to the broader economy. Chair Kevin Warsh says the U.S. economy is moving in the right direction and that faster productivity growth is helping ease concerns that demand is overheating.
Highlights
- The Fed held interest rates steady, with policymakers stating the U.S. economy is not running too hot despite AI-driven demand pressures.
- Warsh emphasized that growth is not fueling inflation and the Fed's intention is to maintain economic momentum without unnecessary intervention.
- Productivity gains, much of which predate current AI discussions, suggest U.S. economic capacity could be stronger than standard measures indicate, supporting stable inflation.
Rate decision and policy message
As reported by Reuters, Warsh says after the Fed holds interest rates steady that policymakers do not judge the U.S. economy to be running too hot, even with some demand pressure linked to the boom in AI investment.Speaking at a news conference, he says the economy is "pointing in the right direction" and adds that the central bank's goal "isn't to throw sand in the gears" of the economy. Warsh also says he does not believe growth itself is driving inflation or making the Fed's job harder.
Productivity gains shape the outlook
Warsh says potential growth remains difficult to determine, suggesting the economy's capacity may be stronger than standard measures indicate.He says productivity has improved, even if it cannot be measured precisely, and adds that much of that change predates the current discussion around superintelligence. That view points to a policy outlook in which stronger output can coexist with stable inflation pressures, a key consideration for monetary policy and financial markets.
In our earlier article on the Fed’s policy messaging ahead of the next rate decision, we examined how Chair Kevin Warsh’s push for a quieter central bank ran into resistance from other officials who argued that frequent public guidance helps policy work effectively. We also noted that a 3.7% year-on-year CPI reading and mixed signals from policymakers kept expectations for an additional hike finely balanced, with markets reacting sharply to clearer statements from key Fed figures.
Latest Fed News
-
Afghanistan
-
Albania
-
Algeria
-
Angola
-
Argentina
-
Armenia
-
Australia
-
Austria
-
Azerbaijan
-
Bahamas
-
Bahrain
-
Bangladesh
-
Belarus
-
Belgium
-
Bolivia
-
Botswana
-
Brazil
-
Brunei
-
Bulgaria
-
Cambodia
-
Cameroon
-
Canada
-
Chile
-
China
-
Colombia
-
Congo
-
Costa Rica
-
Cote d'Ivoire
-
Croatia
-
Cuba
-
Cyprus
-
Czechia
-
DR Congo
-
Denmark
-
Dominican Republic
-
Ecuador
-
Egypt
-
El Salvador
-
Estonia
-
Eswatini
-
Ethiopia
-
Finland
-
France
-
Georgia
-
Germany
-
Ghana
-
Greece
-
Haiti
-
Hong Kong
-
Hungary
-
India
-
Indonesia
-
Iran, Islamic republic
-
Iraq
-
Ireland
-
Israel
-
Italy
-
Jamaica
-
Japan
-
Jordan
-
Kazakhstan
-
Kenya
-
Korea
-
Kuwait
-
Kyrgyzstan
-
Laos
-
Latvia
-
Lebanon
-
Lesotho
-
Libya
-
Lithuania
-
Luxembourg
-
Madagascar
-
Malaysia
-
Malta
-
Mauritius
-
Mexico
-
Moldova
-
Mongolia
-
Montenegro
-
Morocco
-
Mozambique
-
Myanmar
-
Namibia
-
Nepal
-
Netherlands
-
New Zealand
-
Nigeria
-
North Macedonia
-
Norway
-
Oman
-
Pakistan
-
Palestine
-
Panama
-
Papua New Guinea
-
Paraguay
-
Peru
-
Philippines
-
Poland
-
Portugal
-
Puerto Rico
-
Qatar
-
Reunion
-
Romania
-
Rwanda
-
Saudi Arabia
-
Serbia
-
Singapore
-
Slovakia
-
Slovenia
-
Somalia
-
South Africa
-
Spain
-
Sri Lanka
-
Sweden
-
Switzerland
-
Syria
-
Taiwan
-
Tajikistan
-
Tanzania
-
Thailand
-
Trinidad and Tobago
-
Tunisia
-
Turkey
-
UAE
-
Uganda
-
Ukraine
-
United Kingdom
-
United States
-
Uruguay
-
Uzbekistan
-
Venezuela
-
Vietnam
-
Yemen
-
Zambia
-
Zimbabwe
- Forex
- Crypto
