Warsh's 5 Fed task forces tilt toward AI bulls in reform push

Federal Reserve Chairman Kevin Warsh tapped three AI optimists — venture capitalist Marc Andreessen, economist Charles I. Jones and Xbox CEO Asha Sharma — to lead a task force examining how artificial intelligence will reshape productivity and jobs, the Fed said Thursday.

"The US economy has changed significantly over the last generation, and never more so than right now," Warsh said in a statement announcing the 15 co-leaders across five panels covering communications, data, the balance sheet, productivity and inflation frameworks.

The AI task force members all share Warsh's conviction that the technology will be transformative. Jones, a Stanford economist now on leave at Anthropic, wrote in a recent paper that AI could push US growth beyond 5 percent per year, more than double the historical 2 percent average. Andreessen, a longtime Warsh friend, told podcaster Joe Rogan in May that AI represents "turning sand into thought." Sharma, who became Microsoft's Xbox CEO in February, said she believes in AI "absolutely" even as she chose not to prioritize it for console gamers.

The composition of the task forces signals a reform path that prizes evidence over political ideology, according to early reviews. But Warsh faces a harder sell on the Federal Open Market Committee, where June meeting minutes showed members skeptical that AI-driven productivity gains will arrive quickly or in meaningful magnitude. The Fed meets again July 30-31, with markets pricing a hold at 5.25 percent to 5.50 percent.

Warsh, who took the helm at the Fed less than two months ago, has called for "regime change" at the central bank and said he wants to reduce its roughly $6.7 trillion balance sheet. The task forces are expected to finish their work by the end of the year, producing recommendations for the FOMC.

The other panels draw from a similarly broad pool. Former Walmart CEO Doug McMillon and Harvard economist Raj Chetty will co-lead the data task force. Raghuram Rajan, former governor of the Reserve Bank of India, and Jeremy Stein, a former Fed governor, will examine the balance sheet. Greg Mankiw, former chairman of the White House Council of Economic Advisers, and Nobel laureate Thomas Sargent will lead the inflation frameworks panel. Former Bank of England Governor Mervyn King will co-lead the communications task force.

The inclusion of foreign central bankers and Obama-era appointees has drawn positive early reviews at a moment when other independent US agencies face political pressure. "I am honored that the best minds from a range of disciplines have agreed to work with us to sharpen our performance as an institution," Warsh said.

The FOMC Skepticism

Where Warsh may encounter resistance is inside his own committee. FOMC participants at the June meeting acknowledged the possibility that AI could boost productivity, the minutes showed, but "considerable uncertainty remained regarding both the timing and magnitude of potential productivity gains, which were expected to lag the ongoing boost of AI adoption on demand."

New York Fed President John Williams on Thursday flagged a separate concern: price increases in electricity and semiconductors from the AI boom. Some components have doubled and tripled, Williams said, calling AI a "demand shock" whose supply-side response remains unclear. If supply fails to keep pace, the inflation pressure could complicate the Fed's path to lower rates.

Warsh has previously argued the opposite — that AI's productivity gains could allow the economy to grow faster without stoking inflation, giving the Fed room to cut. The last time a Fed chairman made such a technology-driven case for easier policy was Alan Greenspan's productivity argument in the late 1990s, which preceded a period of strong growth with contained inflation.

This article is for informational purposes only and does not constitute investment advice.