Fed Chair Warsh Bets on AI to Cut Costs, Echoing 1990s Boom

Kevin Warsh, the newly installed Federal Reserve Chair, is staking out a bold position. He believes artificial intelligence will drive down costs across the economy, urging the Fed to adopt a forward-looking policy framework.

Sworn in on May 22, 2026, after a nomination by President Trump, Warsh argues AI is a disinflationary force that could reshape the US economy, similar to the internet-led productivity boom of the 1990s. He points to Alan Greenspan's patience during that era as a model.

However, not all his Federal Reserve colleagues are convinced. Skeptics cite stubborn headwinds from tariffs and energy costs, preferring to wait for concrete data before adjusting interest rates.

For investors, the stakes are high. If Warsh is right and AI suppresses inflation, rate cuts become viable. If he's wrong, premature easing could fuel stagflation.