Outgoing Atlanta Fed President Raphael Bostic told said the rapid adoption of artificial intelligence may push the US into a period of structurally higher unemployment. In an interview with Reuters, he suggested that firms may simply need fewer workers, raising the level of joblessness considered consistent with full employment.
Rather than attempting to artificially suppress unemployment with rate cuts, Bostic argued policymakers should recognize structural shifts and set rates accordingly. “This is a very hard time to be a central banker,” he said, noting that the same economic indicators may now carry different implications as technological change reshapes the labor market.
With inflation still above target, Bostic warned that easing policy to counter structural forces could lead to both higher inflation and misaligned employment signals. “To address short-run issues that are structural in nature could put us at risk of a much more difficult situation, where both of our mandate measures seem to be moving in the wrong direction,” Bostic said.
He steps down as president of the Federal Reserve Bank of Atlanta at the end of his term on February 28.
