The Federal Reserve is monitoring whether artificial intelligence will trigger a temporary surge in unemployment, Governor Lisa Cook said during a talk on emerging technology. Cook stated that the buildout of AI infrastructure is generating economy-wide demand and price pressures that will persist in the coming months. These factors, combined with higher oil prices and supply chain disruptions stemming from the conflict in the Middle East, are contributing to overall inflation.

The central bank's monetary tools are too blunt to target sector-specific price shifts, and Cook warned that attempting to manage relative price shifts in narrow sectors could be a mistake. While she noted that interest rate cuts might further fuel inflation, she suggested that pressures could eventually ease as the economy realizes productivity gains from AI. The current labor market is well positioned to withstand an increase in rates, she added.