‘Most consequential change’: Kevin Warsh says AI will reshape US economy, warns of a ‘bumpy’ road ahead
US Federal Reserve boss Kevin Warsh said on Friday that artificial intelligence (AI) is the “most consequential change” to the global economy and predicted that, though its effects would be positive, the path forward would be "bumpy".
Speaking at an event during the IMF-World Bank Annual Meetings in Bangkok on Friday, he further pointed out that AI’s economic impact would unfold in phases, with an investment-driven rise in demand likely to push inflation higher in the short term.
“I'd say the advent of this new technology is probably the most consequential change to the US and the global economy in my lifetime,” Warsh said.
He acknowledged that the AI investment boom could push prices higher in the near term. However, he expects the technology to generate substantial benefits for businesses and economies over time.
“There's really, I think, a huge benefit to the global economy, to the US economy over the horizon,” he said.
Warsh said he was approaching AI’s macroeconomic implications “soberly, responsibly” in his role overseeing the US central bank.
The technology could create a short-term inflationary impulse through demand-side effects, while expected to deliver a positive supply-side shock in the long term
Warsh said he expected the Federal Reserve to use AI to better analyse data in its conduct of monetary policy, as an example of a positive effect.
He further reiterated his view that AI would “make economies and countries that put it to good use more productive”, suggesting that the gains would depend partly on how effectively businesses and governments adopt the technology.
Despite the potential benefits, Warsh cautioned against assuming a smooth transition. Uncertainty over the technology’s development and the market structures that emerge around it could make the journey volatile for businesses, investors and policymakers.
“The path from where we are to there is likely to be a very bumpy one,” he said, adding that the uncertainty extended to “our understanding of the technology” and the market structure of emerging AI industries.
His remarks underline the challenge facing policymakers: balancing the near-term inflationary pressures associated with heavy AI investment against the possibility of sustained productivity gains in the years ahead.
(With inputs from AFP)
Sanchari Ghosh is an Assistant Editor at Mint with over 12 years of experience in journalism, specialising in personal finance, DLT & DeFi, geopolitics and foreign policy, with a particular emphasis on how these areas intersect. <br> She writes extensively about how money works in everyday life—helping readers navigate personal finance decisions. <br> As AI reshapes investing behaviour, capital is increasingly flowing into decentralized ecosystems, redefining how assets are managed, traded, and valued. She focuses on explaining how money flows within frameworks like Distributed Ledger Technology (DLT), DeFi protocols, and crypto markets—while also exploring what the future of money could look like in a trustless, programmable financial world. <br> She also focuses on immigration-related issues, simplifying complex topics around visas, passports, overseas financial planning, and the many practical challenges Indians face while moving or living abroad. <br> Alongside personal finance, Sanchari has a strong understanding of international politics, contemporary and historical conflicts, and global state decisions. She closely tracks how geopolitical developments influence economies, markets, and individual financial choices, bringing together finance and global affairs in her reporting. <br> She began her career as a desk editor, which gave her a strong foundation in news writing. Over time, her interest naturally shifted toward personal finance. Before joining Mint in 2020, she worked DNA, The Times of India, Outlook Money, BloombergQuint, and ETMoney. At Mint, she got an opportunity to expand her coverage to include immigration and geopolitical developments while continuing to closely follow personal finance trends and market movements.As a journalist, she is committed to accuracy, intellectual rigour, and fairness. <br> She is an English Major and her work took her across cities including Delhi, Mumbai, and Pune. Living independently from an early age gave her firsthand experience in managing life and money on her own. This practical exposure sparked her strong interest in personal finance. <br> Outside the newsroom, Sanchari is a sports enthusiast who regularly plays lawn tennis and squash. In her younger years, she was also a national-level badminton player.
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