WASHINGTON–Federal Reserve Governor Lisa Cook said during a speech here that the rapid advances in artificial intelligence (AI) could pose new challenges for the central bank’s traditional tools as the technology fundamentally reshapes the U.S. economy.
In the remarks to the National Association for Business Economics conference in Washington, at which Cook was part of a panel on “AI and Productivity across the Economy,” she highlighted both the promise of AI-driven productivity and the limits of monetary policy in addressing labor market disruptions tied to the technology.
Cook described the current moment as a potential “creative destruction” resetting of economic activity, where AI enables faster innovation, but may also displace workers before new opportunities take hold.
Unemployment Could Rise
She also emphasized that while AI has the capacity to drive long-term growth and new industries, the transition could see unemployment rise in the short term, a shift that conventional interest-rate adjustments might not be well-suited to counteract.
“In a productivity boom like this, increased unemployment may not stem from slack in the economy, and typical demand-side policy could end up stoking inflation while trying to counter what is essentially structural change,” Cook said, adding that other policy tools, including workforce training and education, may be more effective in helping displaced workers.
