Federal Reserve optimistic about AI boosting economy
The U.S. Federal Reserve recently raised the idea that artificial intelligence (AI) could bring about deflation at the Federal Open Market Committee (FOMC) meeting, which could boost economic growth. The Legislature discussed factors that could lead to deflation in the future.
Initially, committee members cited factors such as continued easing of product and labor market demand-supply pressures. They also consider the lagged impact of past monetary policy tightening on wages and prices, the delayed response of rental market developments to housing prices, and prospects for further improvement on the supply side. However, they believe AI-related technologies can also play an important role in slowing inflation. The application of this innovative technology can significantly improve the productivity of enterprises and thereby promote economic growth.
Source: X Netizen compiled FOMC meeting minutes
Meeting participants also observed that long-term inflation expectations remain stable, which is seen as fundamental to slowing the inflationary process. Therefore, they are clamoring for more favorable data to ensure that inflation can move steadily towards the 2% target.
The emphasis on AI's role in mitigating inflationary factors shows the growing acceptance of this emerging technology across multiple industries and countries. The U.S. government may eventually give the industry more support, especially as it has been pushing for regional regulation of AI. In December 2023, the Biden administration began a plan to revolutionize AI, with a special focus on its safety, security, and trust. The initiative sets out key standards for the safe deployment of generative AI and is the first U.S. executive order to safely regulate AI. This move is consistent with the EU’s efforts on AI.
Tech giants warn of AI risks
Despite the promising prospects of AI, major technology companies, including Nvidia, Meta, Microsoft and Google, have emphasized the risks of artificial intelligence in documents submitted to the U.S. Securities and Exchange Commission (SEC) .
In the "Risk Factors" section of their financial reports, these technology giants warned of issues related to the development of AI. For example, Meta mentioned that AI technology could be used to influence elections. According to Bloomberg, Microsoft mentioned the legal issues that may arise from the use of data by its AI systems, including copyright liability. At the same time, Google’s parent company Alphabet expressed the impact of AI on human rights and privacy.
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These risk revelations stand in stark contrast to optimistic AI discussions in earnings calls and public statements. Some of the warnings run counter to public relations for some companies. Adobe, for example, noted that the spread of AI could threaten its software sales, despite previously mentioning the importance of Photoshop.
While not all risks revealed will materialize, some do. For example, Huida warned of restrictions on its products due to AI misuse. Subsequently, the U.S. government imposed controls on the export of advanced chips to China.
The Fed's predictions contrast sharply with warnings from tech giants, suggesting that while promoting the development of AI, we also need to be careful about the risks it may bring. The future of AI is both full of potential and accompanied by challenges. How to balance the two will become the focus of attention for all parties.
