Fed's Daly says AI is not for now driving inflation up or down

Mary Daly said AI could be a deflationary force over a 5- to 10-year horizon, but she does not view it as a pressing issue for monetary policy, which operates on a 12-month horizon. The comment is mainly a longer-term inflation and productivity observation rather than a near-term policy signal. Market impact should be limited given the absence of any change in rates or Fed guidance.

Analysis

Mary Daly said AI could be a deflationary force over a 5- to 10-year horizon, but she does not view it as a pressing issue for monetary policy, which operates on a 12-month horizon. The comment is mainly a longer-term inflation and productivity observation rather than a near-term policy signal. Market impact should be limited given the absence of any change in rates or Fed guidance.