Fed Officials Saw AI Risks on Multiple Fronts

Dow Jones
08/20

1403 ET - At their July meeting, Fed officials weighed two separate ways that artificial intelligence could pose risks to the economy. First, they worried that the investment boom is inflationary. Several officials thought of AI "as already having broader effects on prices by pushing up aggregate demand or assessed it would likely do so relatively soon," according to the minutes. Second, they worried that AI-fueled stock gains could pose a financial-stability risk. If tech earnings forecasts are revised lower, it "might lead to a broad-based repricing of assets, generate tighter financial conditions, and create strains in financial institutions directly or indirectly exposed to the sector," some participants said.

 

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