Hassett: ai could force fed rate cuts, warsh poised to deliver

Kevin Hassett, former chairman of the Council of Economic Advisers, is already laying the groundwork for a potential shift in Federal Reserve policy, arguing that artificial intelligence’s productivity gains could justifyinterest rate cuts – and hinting at a friend’s imminent role in making that happen.

The ai productivity argument

Hassett, speaking on CNBC, asserted that the burgeoning productivity spurred by AI is creating downward pressure on inflation. “The AI, by increasing productivity, puts downward pressure on inflation, which should ease the pressure on the Federal Reserve. They should be able to lower interest rates, and I expect that’s what will happen when my friend Kevin Warsh takes over,” he stated. This perspective directly challenges current market expectations, which largely anticipate the Fed maintaining its current stance.

But there’s a detail that’s often missed in the broader discussion: Hassett’s conviction that AI represents a transformative force, potentially exceeding the impact of the internet itself. He boldly declared,