Fed’s Warsh: Watching AI’s Impact on Supply and Demand, But AI Safety Decisions Belong to Other Policymakers

Warsh's framing keeps the Fed in its lane: it monitors AI's demand-and-supply effects for monetary policy but defers safety questions to other agencies, leaving a coordination gap that markets may read as regulatory ambiguity. The labor-market remark signals the Fed sees no inherent trade-off between disinflation and employment, which matters for how AI-driven productivity shifts get absorbed. Whether that division of labor holds—and whether AI's supply effects show up in the data the Fed actually targets—is the open question.