Economists Skeptical of AI's Impact on Interest Rates

A recent survey conducted by the Clark Center for Global Markets at the University of Chicago has revealed that nearly 60% of economists disagree with the notion that AI advancements will lead to interest rate cuts. According to BlockBeats, the survey, which included 45 economists, suggests that the impact of AI technology on prices and borrowing costs over the next two years is expected to be minimal, with projected decreases in PCE inflation and neutral interest rates likely to be less than 0.2 percentage points. Approximately one-third of respondents believe that the AI boom could even compel the Federal Reserve to slightly increase the so-called 'neutral rate,' a level at which borrowing costs neither stimulate nor hinder demand. The findings indicate that gaining support from other members of the Federal Open Market Committee (FOMC) for AI-induced productivity growth could be challenging for Walsh. This may complicate efforts to implement interest rate cuts at the scale desired by U.S. President Donald Trump before the midterm elections in November.