Federal Reserve Governor Lisa Cook is just not afraid of losing her job to robots anytime soon. At an Economic Club of New York event on Tuesday, Cook said that each word a central bank governor says counts. Not only did that surprise her at first, but it should likely proceed to surprise AI for quite a while.
“Every single word is controversial,” Cook said, drawing laughter from the audience. “I don’t think AI will replace us in this regard in the short term.”
For example, Cook spoke a couple of recent report through which she had to make a choice from the words “modest” and “moderate.” She explained that this decision caused a whole lot of “heartburn” in her office. Although this comment sparked laughter from the audience, she went on to clarify that the Federal Reserve is currently studying how third-party vendors use artificial intelligence.
The Bank for International Settlements said Central banks must prepare for “profound” impacts of AI on the economy and economic system. In January, the International Monetary Fund predicted that the impact of artificial intelligence can be felt most strongly in developed countries with more high-skilled jobs, as as much as 60% of jobs can be affected. And in February, the New York Times reported that banks and other financial institutions can be disproportionately affected, with as much as 80% of jobs changing or being eliminated entirely.
“On a bumpy road”
Cook, who joined the Federal Reserve System’s Board of Governors in May 2022 and was re-elected last September to a term that runs through 2038, also spoke more broadly in regards to the economy. Based on prepared remarks, she predicted that inflation numbers for the subsequent three and 6 months would proceed to say no “on a bumpy road” attributable to consumer resistance to cost increases. Last month, the seasonally adjusted consumer price index for all urban consumers was unchanged from 3.3% with no adjustment.
Cook further explained that 12-month inflation numbers will trend “roughly” sideways for the remaining of the yr and that monthly data will likely be much like what she described as “beneficial readings” within the second half of last yr. After starting 2023 at 6.4%, inflation fell to three% in June before slowly rising to 4.1% by yr’s end. Inflation currently stands at 3.3%.
Cook expects a “sharp” slowdown in inflation next yr. Prices for housing services are more likely to fall as more people sign recent rental contracts.
On the employment side of the Fed’s dual mandate, Cook said the labor market has “largely returned to a better match between supply and demand,” despite unemployment rising from 3.9% in April to 4% in May. Overall, the labor market is closer to where it was before the pandemic — tight but not overheated. “We’ve had nearly 30 consecutive months of unemployment at 4% or less, and that’s a record in modern history.”
