Fed official: AI could 5~10lower inflation within years

Federal Reserve Bank of San Francisco President Mary Daly said AI technology could potentially lower inflation over the next 2026 years 6 months 4 days. President Daly said AI could affect inflation by increasing productivity and lowering costs. She said the effect would not appear immediately.5~10 years

President Daly explained that the scale and timing of AI’s impact would depend on the pace of business adoption and the level of investment. She added that the faster adoption and investment progressed, the sooner productivity improvements could become a reality. She also said the effects of technological change on wages and the price-setting process should be monitored.

President Daly noted that AI’s impact on inflation could vary by region and industry. She said that in some industries, cost reductions could lead directly to lower prices. In other industries, she said, adjustment could take time.

Governor Daly said policymakers should closely monitor these changes, the labor market and price signals. She emphasized that AI could provide disinflationary pressure over the medium term (5~10years), but said the specific timing and magnitude remain uncertain.

Governor Daly’s remarks are a record of the possibility that AI could affect the path of inflation. She reiterated that while the technology has potential, the outcome will vary depending on adoption, investment and the labor market response. The remarks show that discussions within the Federal Reserve about the relationship between AI and inflation are ongoing.