Federal Reserve Bank of San Francisco President Mary Daly said artificial intelligence is a live consideration for monetary policy, both now and over the medium term.

"AI really matters for how we think about policy in near and medium term," Daly said, adding that "AI matters to price stability and employment mandates."

The Fed operates under a dual mandate of price stability and maximum employment, and Daly's framing ties AI directly to both objectives. Her remarks place AI squarely within the monetary policy discussion, with implications for both inflation and the labor market. The emphasis on the near and medium term suggests she sees the technology as relevant to decisions the Fed is already facing. The comments alone did not offer a clear signal on the direction of policy: Daly did not spell out how AI might affect the balance between inflation pressures and employment risks, or whether it changes the appropriate path for interest rates.

Earlier, Richmond Fed President Thomas Barkin said the economy remains resilient, with consumer spending holding up despite relatively flat incomes, even as inflation pressures continue to complicate the policy outlook. Businesses are facing higher costs and, after years of elevated inflation, are finding it easier to justify passing those costs on to customers.

Barkin also highlighted AI investment as a source of supply-chain pressure and additional demand that the Fed can lean against through monetary policy. Taken together, the remarks from two regional Fed presidents show AI entering the central bank's reading of both demand conditions and supply constraints. On rates, he described the direction of travel as straightforward but the pace as uncertain, favoring a gradual approach as policymakers assess incoming data — making future Fed commentary on AI and upcoming inflation and employment readings the items to watch.

Source: InvestingLive