Fed’s Cook Says AI Boom May Call for Broader Policy Toolkit
Fed’s Cook Says AI Boom May Call for Broader Policy Toolkit
Publish Date: 2026-02-24 14:11:00
Source Domain: www.pymnts.com
- Federal Reserve Governor Lisa Cook discussed how artificial intelligence (AI) could fundamentally reshape the U.S. economy and challenge the central bank’s traditional monetary tools during a speech at the National Association for Business Economics conference.
- Cook highlighted the potential “creative destruction” period due to AI where innovation is boosted but could initially lead to higher unemployment as it displaces workers before new opportunities develop.
- She emphasized that conventional interest-rate adjustments might not adequately address the structural labor market disruptions arising from AI, suggesting other tools like workforce training and education could be more effective.
- The transition brought by AI could cause inflation if traditional demand-side policies attempt to counteract the structural changes instead of the usual economic slack.
- Cook’s comments align with the ongoing debate within the Federal Reserve regarding the intersection of technological change, job markets, and the effectiveness of traditional monetary policy in addressing these changes.
- There is concern among some Federal Open Market Committee members that AI’s impact may be more benign than Cook’s warning suggests, reflecting broader uncertainty about emerging technologies’ influence on labor markets and inflation.
- Cook’s perspective points to the need for the Fed to reevaluate its tools in response to the long-term growth and structural shifts generated by AI, moving beyond mere rate adjustment, and considering the evolving economic landscape.
