Can an A.I. Productivity Boom Clear a Path for More Rate Cuts? Trump’s Fed Pick Thinks So.
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by Colby Smith and Ben CasselmanFebruary 20, 2026
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The article discusses whether an AI-driven productivity boom could pave the way for further interest rate cuts, focusing on Kevin M. Warsh's perspective as Trump’s nominee for Fed chair. Warsh argues that AI represents a transformative wave with significant productivity gains, potentially allowing the Fed to lower rates without sparking inflation.
Warsh compares AI to past tech revolutions, such as the internet, viewing it as structurally disinflationary. He suggests that while the full impact of AI on the economy may take time to materialize, anecdotes might precede data, urging central bankers to act proactively on potential productivity surges.
However, other Fed members like Michael S. Barr remain skeptical, emphasizing doubts about AI’s immediate economic impact and the need for cautious monetary policy given sustained inflation above target. This divergence highlights ongoing debates within
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Originally published on NYT Homepage on 2/20/2026