00:00Productivity growth in the United States has largely recovered from the COVID doldrums,
00:04driven in large part by firms' investments in various automation technologies, including AI.
00:10Many observers expect productivity to continue to increase substantially at a higher rate,
00:16potentially easing inflation pressures and allowing the Fed and other central banks to lower their policy rates.
00:23I am an AI and productivity optimist, but I live in Missouri, known in the U.S. as the show
00:29-me state,
00:30where we insist on solid evidence before reaching a conclusion.
00:34To date, the data are inconclusive about agro-productivity being in a sustained higher growth regime.
00:42However, the demand pressures associated with the AI boom are very real.
00:47We see them in the data center build-out, the demands for electricity and memory chips,
00:51and the buoyant share prices of AI companies that are helping propel consumer spending by increasing household wealth.
00:59That brings me to monetary policy.
01:02With the real policy rates sitting below the FOMC's notion of long-run neutral,
01:08inflation running meaningfully above target,
01:11long-term inflation expectations drifting higher,
01:14and the labor market remaining stable,
01:17I believe it would be risky to rely on the prospect of higher productivity growth in the future
01:23to solve our inflation problem today.
01:26I am prepared to adjust my position if the evidence becomes clear
01:30that higher productivity growth is pushing inflation lower to target.
01:35But for now, I believe a vigilant focus on returning inflation to target
01:39will best ensure success in achieving both maximum employment and price stability for the American people.
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