Kevin Warsh, chairman of the Federal Reserve, signaled the central bank will not provide forward guidance to markets while flagging concerns about artificial intelligence's impact on employment during remarks at the ECB Forum on Central Banking 2026 in Sintra, Portugal on Wednesday.
Warsh emphasized that inflation remains materially above the Fed's target level and noted weakness in the Canadian economy, while stressing that monetary policy decisions are interconnected across the United States and European Union. He rejected the notion that the Fed will issue direct market signals, stating the central bank will instead "chart a new course to make better decisions" moving forward.
On artificial intelligence, Warsh acknowledged that AI model improvements are accelerating exponentially and that the U.S. is "likely to be among the principal winners" in the global AI race. However, he raised a critical concern: the timing of AI's displacement effects on the labor market remains uncertain. "We must ensure both employment and price stability," Warsh said, underscoring the Fed's dual mandate challenge as productivity gains from AI reshape the workforce.
Warsh's comments reflect a broadening debate within policymaking circles about balancing technological innovation benefits against labor market disruption risks, even as the U.S. economy benefits from AI-driven productivity gains that officials said they do not fear.