Fed's Williams: Unclear How Productivity Boom Will Impact Interest Rates

Odaily reports that New York Federal Reserve President John Williams stated it is currently unclear how improvements in productivity will ultimately affect interest rates and the Fed's policy formulation. Williams said, "Regarding the question of 'how changes in trend productivity growth will impact the economy and monetary policy,' my answer is unsurprising — it's 'it depends.'" He added, "Specifically, it depends on the nature of the change itself and its expected duration."

Williams made these remarks as Fed officials are trying to assess the impact of a recent surge in productivity, and expectations of further productivity gains driven by artificial intelligence technology, on inflation and the labor market. Several Fed officials have expressed uncertainty about how these dynamics will ultimately evolve. (Jin Shi)