Jefferson: AI productivity effects uncertain... weight on inflation trends

Federal Reserve Vice Chair Philip Jefferson said on the 13th that inflation trends are a more important signal than AI-driven productivity gains in setting monetary policy, noting that while AI investment may lift long-term productivity, the timing and scale of those effects remain uncertain. Speaking in San Diego, Jefferson cited U.S. labor productivity growth averaging 2.2% annually from 2020 to 2025, up from 1.5% in the prior business cycle, and flagged both AI-related demand and long-run productivity gains as factors for policy. The remarks matter because they signal the Fed will prioritize disinflation progress over optimistic assumptions about an AI productivity boom when calibrating rates. Investors should watch upcoming inflation data and productivity readings for confirmation of whether the recent acceleration persists.