Fed’s Warsh sees AI wealth gains but warns of a “very bumpy” transition

Federal Reserve Chairman Kevin Warsh said on October 16 that AI could make economies more productive and wealthier, but warned that the transition would be “very bumpy.” His remarks in Bangkok paired a positive long-term outlook with uncertainty about how the technology will affect jobs and the economy in the near term.

Warsh spoke at a fireside chat with International Monetary Fund Managing Director Kristalina Georgieva during the IMF-World Bank Annual Meetings. The October 16 appearance was part of the weeklong gathering in Bangkok, according to CNBC’s coverage.

His optimism carried a condition: the gains would go to economies that use AI well. He described the potential benefits in terms of productivity and wealth, tying the economic promise to effective use of the technology.

I want you to hear from me optimism, but optimism leavened by the seriousness of purpose

Kevin Warsh, Federal Reserve chairman

Warsh put the significance on a decade-long horizon. Looking back ten years from now, he said, people would judge AI “hugely consequential.” That was a statement about its eventual importance, rather than a prediction of an easy adjustment.

For the nearer term, his assessment was less settled. Warsh said AI’s effects on employment and the real economy remain unknown.

No commitment ahead of the October rate meeting

At the same appearance, Warsh said the global economy had “broadly conformed” to the Fed’s expectations since September. The central bank raised interest rates last month to a range of 3.75% to 4%, its first increase since 2023.

He declined to say what he would do at the October 27–28 meeting, telling the audience, “I don’t prejudge meetings.” A communication blackout period was due to begin later on October 16, leaving his Bangkok comments without a commitment on the next rate decision.