Svmuu reported that Chicago Fed President Austan Goolsbee on Thursday further intensified his warning: the market’s growing expectations for AI’s potential to boost productivity could push up inflation and force the Federal Reserve and other central banks to raise interest rates. Goolsbee stated, “The louder the hype about future productivity, the higher interest rates may need to go to prevent the economy from overheating. More importantly, in the short term, facing supply shocks—whether from oil prices, supply chain disruptions, or other factors—can make the problem even more severe.” These remarks further expand on the view Goolsbee first publicly raised earlier this month. He then questioned the idea that AI would have an inflation-suppressing effect, thereby creating room for central banks to cut interest rates—a view championed by many officials in the Trump administration and by the new Federal Reserve Chairman, Kevin Warsh. In the 1990s, as computers became more widely adopted, U.S. productivity unexpectedly surged, driving rapid economic growth without igniting inflation. However, Goolsbee argues that if productivity gains are already expected by the market, the situation would be different. The market might trigger a spending spree in advance, pushing up prices before actual productivity improvements materialize. (Jin Shi)