Central banks assess AI impact on jobs and monetary policy

Traders Union
All News
Regulators
Central banks assess AI impact

Highlights

Federal Reserve and People’s Bank of China signal intensified focus on AI’s economic impact, with new task forces and policy support initiatives discussed at major Asian forums.
Former Fed Vice Chair Donald Kohn notes persistent U.S. full employment despite wage declines, as global policymakers prepare to debate AI-driven labor shifts at BIS meetings in Basel.
IMF’s Sonali Jain-Chandra warns Asian economies are vulnerable to shocks in AI demand, urging fiscal and external buffers to mitigate macroeconomic and supply chain risks.

Policy focus expands across major forums

As reported by CNBC, recent gatherings in Asia, including the International Monetary Fund-World Bank Annual Meetings in Bangkok and the Bund Summit in Shanghai, show rising attention among policymakers and researchers to how AI could reshape employment and central bank decision-making.

At the Bangkok meetings, Federal Reserve Chairman Kevin Warsh says AI is a positive economic shock that could fundamentally change monetary policy. He also points to a Nov. 16 hearing in the Bay Area on productivity and jobs, and says the Fed has a task force focused on AI.

Three days later in Beijing, People’s Bank of China Governor Pan Gongsheng uses the closing portion of a keynote at the Financial Street Forum to address AI, according to an official transcript. He says the central bank will evaluate the technology's impact, improve financial support for the AI industry and promote its use in finance.

Guo Kai, president of the CF40 Institute think tank, says on the sidelines of the Bund Summit that AI's impact on the global economy, employment and China is at the top of the agenda for central bankers attending the event.

Labor market and regional risks in view

Donald Kohn, former vice chairman of the Board of Governors of the Federal Reserve System, says AI may already be influencing wage demands because workers are worried about job security. He says the U.S. economy remains at full employment and demand is fairly strong, while wages have continued to come down in both nominal and real terms.

Kohn expects central bankers and financial regulators to discuss AI's effect on jobs at upcoming Bank for International Settlements meetings in Basel, Switzerland. That suggests concern over AI is moving from conference debate toward a broader regulatory and monetary policy agenda.

Officials also warn that exposure to the AI supply chain could create wider macroeconomic risks in Asia. Sonali Jain-Chandra, deputy director of the IMF's Asia Pacific Department, says economies from Indonesia to China are vulnerable to any downturn in AI demand and argues policymakers should build fiscal and external buffers to preserve room to respond.

Adam Posen, president of the Peterson Institute for International Economics, says there is surprise at the resilience of the global economy despite debate over whether slower AI spending or weaker profitability in the U.S. could trigger a broader slowdown. He says that even if megacap technology stocks face a correction, profits could rotate into adjacent industries in a way that limits damage to the real economy in the near term.

Our earlier coverage of the Nasdaq 100’s volatility highlighted how concerns about AI supply chains and higher financing costs weighed on tech and semiconductor shares, even after a short-lived rebound. The analysis noted the index remained below key moving averages, with mixed momentum and oversold signals suggesting traders were still pricing in AI-related credit and supply-chain risks.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.