STOCKS | Warsh Says AI Is a New Variable for Monetary Policy

Federal Reserve Chair Kevin Warsh delivered his first keynote speech in office at the Jackson Hole global central banking conference on August 28, titled "In Our Time." According to Sina Finance, he opened with artificial intelligence, calling the current moment a "historical hinge point" and saying AI progress has moved faster than prophets predicted two or three years ago. Warsh said capital is flowing into related infrastructure, with a "super-Moore's-law" dynamic and changing scaling laws reshaping the way innovation works and how fast it advances. He said the Fed is "closely watching" the developments and acknowledged AI as a new variable that could become a new factor of production, affecting both the real economy and monetary policy operations. He also said the speech could be viewed as an outline or roadmap, "just don't call it forward guidance," and noted that the day marked his 100th day as chair. Warsh said users buy tokens in exchange for model access, and cited reports that annual token sales at just two leading labs have topped $100 billion, up more than 500% from a year earlier. The speech said the Fed is asking whether AI adoption will produce significant and sustained productivity gains across the economy, when those gains might appear, and whether token use will complement or replace labor. It also raised questions about whether the next generation of models will require more capital intensity or find a more capital-light path. Warsh said the 2% PCE inflation target is fixed and firm, and that price stability is not automatic. He said there are few clear signs of policy restraint in credit and lending markets, and that he would find it hard to describe broad financial conditions as tight. According to Sina Finance, he said forward guidance should be limited in normal times, while unusual tools should be reserved for true crises.