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Federal Reserve Chairman Kevin Warsh signals a shift toward data-dependent interest rate discipline and AI-focused economic growth.

Federal Reserve Chairman Kevin Warsh delivered a keynote address at the Jackson Hole Economic Policy Symposium, emphasizing a shift toward data-dependent interest rate discipline. Warsh signaled that the practice of forward guidance has overstayed its welcome, opting instead for a commitment to discipline over pre-telegraphed decisions. This pivot to data-dependent volatility was supported by current PCE inflation data, where 54% of components remain above the 3% threshold. While addressing financial innovation, Kevin Warsh focused heavily on artificial intelligence as a primary driver of economic growth. He noted that AI is a new factor of production that could substantially increase productivity and push down inflation. To study these impacts, Warsh appointed a task force earlier this year to examine how AI-related infrastructure and token sales are influencing the job market and business value. Notably, the central bank chose to omit specific mentions of stablecoins and tokenization, suggesting that while the private sector rapidly adopts digital assets, the Fed's primary mandate remains the preservation of the dollar's value through traditional interest rate levers.

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