Lisa Cook, a Federal Reserve governor, isn’t afraid of losing her job to robots anytime soon. Speaking at an Economic Club of New York event on Tuesday, Cook said that when you’re a central bank governor every word counts in a way that not only caught her off guard at first but that likely will catch AI off guard for quite some time.
“Every single word is contested,” said Cook, prompting laughs from the audience. “I don’t think AI is going to replace us in that sense, in the short run.”
As an example, Cook talked about a recent report where she had to choose between using the word “modest” or “moderate,” explaining that the choice led to a lot of “heartburn” in her office. Though the comment roused laughter from the audience, she further explained the Federal Reserve is currently looking into how third-party vendors are using artificial intelligence.
Earlier today, the Bank for International Settlements said central banks needed to prepare for AI’s “profound” impact on economies and financial systems worldwide. In January, the International Monetary Fund predicted that advanced economies with more high-skilled jobs stood to see the biggest impacts from artificial intelligence, with as many as 60% of jobs affected. And in February, the New York Times reported that banks and other financial institutions would be disproportionately impacted, with as many as 80% of jobs being changed or removed altogether.
‘On a bumpy path’
Cook, who joined the Board of Governors of the Federal Reserve System in May 2022 and was reappointed last September for a term ending in 2038, also addressed the economy more generally. Speaking from prepared remarks, she predicted that three- and six-month inflation figures would continue to move lower “on a bumpy path” resulting from consumer resistance to price increases. Last month, the seasonally adjusted consumer price index for all urban consumers was unchanged versus 3.3% unadjusted.
Cook further stated that 12-month inflation numbers will “roughly” move sideways for the rest of this year, and that monthly data will likely be similar to what she characterized as “favorable readings” during the second half of last year. After starting 2023 at 6.4%, inflation dropped to 3% in June before slowly rising to 4.1% by the end of the year. Inflation is currently at 3.3%.
Going into next year, Cook expects inflation to slow down “sharply,” with prices for housing services likely declining as more people sign new leases.
On the jobs side of the Fed’s dual mandate, Cook noted, the labor market has “largely returned to a better alignment between supply and demand,” despite an increase from 3.9% unemployment in April to 4% in May. Overall, the job market is closer to where it was pre-pandemic—tight but not overheated. “We had almost 30 consecutive months of the unemployment rate of 4% or lower, and in modern history, that’s a record.”