Reserve Bank of Australia Governor Michele Bullock characterized the country’s monetary policy as “marginally tight” and added that her job guiding interest rates isn’t finished. https://t.co/cpEzpl1WRg ...

AI and the Federal Reserve - The Fed is dedicating significant attention to AI, with approximately 25% to 33% of Fed communications addressing the topic [2] - A Fed governor suggests policymakers should allow AI disruption, trusting long-term benefits will outweigh costs, similar to historical technology trends [2] - History indicates new technology fosters growth and employment, with capital and labor acting as complements [3] - The challenge for policymakers is to facilitate worker and firm adaptation, ensuring efficiency gains translate to higher wages and growth [3] AI's Impact on Labor and Productivity - AI-related job losses are currently managed through attrition and retraining, but layoffs are expected to increase, particularly for college-educated workers [5] - AI presents potential threats including fraud, disinformation, bias, and cybersecurity [6] - The Fed anticipates AI could deliver greater productivity, potentially allowing the Fed to operate at a lower rate [6] Regulatory Approaches and Investment - A Fed governor suggests the US approach of allowing technology to develop before regulating is superior to Europe's preemptive regulation [7] - The US approach is credited for the US leading Europe in the 1990s technological boom [7] - A report indicates AI investment may have peaked in the first half of the year [8] Monetary Policy Implications - One Fed governor suggests the neutral rate could be higher due to capital investment from AI [8] - The potential influence of AI on monetary policy, particularly regarding long-run rate outlook changes due to investment and productivity booms, remains a key consideration [9][10]

Core Insights - The Federal Reserve is increasingly focused on the implications of artificial intelligence (AI) for economic policy, with a significant portion of discussions dedicated to this topic [2][3] - The Fed governor emphasizes the historical trend that new technologies lead to economic growth and job creation, despite initial job losses [3][4] - There is a recognition of the challenges posed by AI, including potential job displacement, particularly among college-educated workers, but also an opportunity for retraining and adjustment [5][6] Group 1: Economic Impact of AI - The Fed governor believes that the disruption caused by AI should be embraced, as the long-term benefits are expected to outweigh the costs [2][3] - Historical evidence suggests that technological advancements typically result in greater employment and productivity, with capital and labor being complementary [3][4] - The transition period may involve job losses before the benefits of new job creation become apparent, highlighting the difficulty in forecasting future job markets [4] Group 2: Job Market Dynamics - Current AI-related job losses are primarily being managed through attrition rather than mass layoffs, with companies focusing on retraining employees [5] - Layoffs are anticipated to rise, particularly affecting workers with college degrees, as AI continues to evolve [5][6] - The Fed governor acknowledges that there will be both winners and losers in the AI landscape, with productivity gains being a key focus for the Fed [6] Group 3: Regulatory Perspectives - The U.S. approach to AI regulation, which allows technology to develop before implementing regulations, is viewed as superior to the European model of preemptive regulation [7] - This regulatory philosophy is credited with enabling the U.S. to lead in technological advancements during the 1990s [7] Group 4: Future Outlook - A Barclays report suggests that AI investment may have peaked in the first half of the year, indicating a potential shift in the investment landscape [8] - The Fed governor notes that increased capital investment from AI could lead to a higher neutral interest rate in the future [8][10] - The integration of large language models in analyzing Fed communications has been ongoing for nearly a decade, indicating a long-standing relationship between AI and economic policy discourse [9]

The $305 billion stablecoin market could threaten traditional lending, hamper monetary policy and trigger a run on some of the world’s safest assets, the International Monetary Fund warned on Tuesday https://t.co/zuA0vomr41 ...

European Central Bank President Christine Lagarde said she can’t declare an end to interest-rate cuts, despite her reiterating that monetary policy and the economy are “in a good place” https://t.co/s2TlBG6eea ...

Market Trends & Sentiment - Gold's 49% rally over the past 12 months signals potential market trouble ahead, contrasting with bullish equity sentiment [1] - The gold rally reflects increasing fear of stagflation or even recession in the medium term [2] - Gold's performance may reflect deeper concerns that run counter to equity market optimism [2] Economic Factors - Market expects lower interest rates in the future, boosting gold's appeal as a non-yielding asset [1] - Stubborn inflation keeps investors wary as elevated inflation erodes bond yields and purchasing power [1] - Declining deficit to GDP ratio is driven in part by tariff revenue and stronger GDP [1] - A sluggish labor market persists [1]

US-China Trade Relations & Tariffs - The market reacted sharply to President Trump's threat of massive new tariffs on China, with the S&P 500 down approximately 2% and the tech sector experiencing a more significant decline [4] - The expert suggests that the tariff issue is not solvable by monetary policy and recommends the Fed to ignore it [5] - China's cut in access to rare earths is viewed as a reason for potential retaliation from the US [4] Monetary Policy & Inflation - The expert believes that the Fed should hold steady and not continue rate cuts, as cutting rates would validate passing on price increases and potentially fuel inflation [8][9] - The expert suggests that the Fed signaling it does not want to validate price increases would put a lid on inflation [8] Labor Market Analysis - The labor market is described as soft but not significantly different from what is expected in an extended expansion [10] - Wages for lower-end workers are performing well, while supervisory workers have experienced lower pay increases [10][11] - The Atlanta Fed wage tracker signals no serious problems in the labor market [11] Personal Considerations - The individual withdrew his name from consideration for a government position due to personal considerations, including family involvement and satisfaction with his current job [1][2][3] - The expert finds government service to be more painful and hostile than in the past [2]

after rigorous interviews, some lasting as long as 2 hours. Treasury Secretary Scott Besson has winnowed down the list for candidates for Fed chair to five from 11. And that person could be nominated to the Fed, though not necessarily as Fed chair as soon as January.According to senior Treasury officials, the remaining list of candidates, the final five, include sitting Fed officials, vice chair for supervision Michelle Bowman, and Governor Chris Waller. That's along with Kevin Hasset, the director of the N ...

Fed Chair Candidates - Treasury Secretary has narrowed down the list of candidates for Fed chair to five from eleven [2] - The final five candidates include sitting Fed officials Michelle Bowman and Chris Waller, Kevin Hasset, former Fed Governor Kevin Worsh, and Black Rock fixed income CIO Rick Reer [2][3] - The nominee could be appointed as early as December or January, potentially filling Andreana Cougler's vacant Fed governor position and later being nominated as Fed Chair, succeeding Jerome Powell whose term expires in May [4] - The Treasury Secretary seeks a Fed chair with experience in economics, monetary policy, banking regulation, and management [5] Selection Process & Criteria - The selection process includes multiple interviews with the Treasury Secretary, senior Treasury officials, and White House officials, concluding after Thanksgiving [3][4] - The Treasury Secretary has been critical of the Fed, advocating for reviews of its policy structure and mission, particularly its size and scope [6] - The administration seems content with Michelle Bowman's current role as vice chair for supervision, especially regarding bank deregulation for community banks [8] - Rick Reer is noted for his extensive market experience and views on the Fed and fixed income markets, setting him apart as the only candidate without prior Federal Reserve experience [9] Market Perspective - The Treasury Secretary is perceived as having a deep understanding of the markets, influencing the selection process [10][11]

The Bank of Thailand will likely keep monetary policy loose through next year, according to a deputy governor https://t.co/nLIkBdGME0 ...