The Federal Reserve is investigating possible effects generative artificial intelligence (AI) may have on productivity, inflation and the labor market, Fed Chair Jerome Powell said Tuesday (July 2).
Speaking during a panel discussion at the European Central Bank’s Forum on Central Banking in Portugal, Powell said that the massive investments being made in AI suggest “a sense of something big coming here,” Seeking Alpha reported Tuesday.
It’s too early to tell whether the adoption of this technology will eliminate jobs, augment existing jobs or create new ones, Powell said, according to the report.
“There’s not a lot a central bank can do about that,” Powell said, per the report. “But, like everybody else, we’re meeting with all the experts and asking ourselves what will be the effects on productivity, on inflation, on growth, and will it be enormously displacing, and if so, for whom?”
As for the Federal Reserve, it is investing “a lot of time and effort” into investigating the potential effects and, while it’s not using generative AI, it is “carefully looking” at other forms of AI and may use that, Powell said, according to the report.
The International Monetary Fund (IMF) said in January that the impact of AI on employment will be especially great in advanced economies.
While about 40% of global employment is exposed to AI, 60% of jobs in advanced economies may be impacted by the technology, the IMF said in a Jan. 14 blog post.
Half of these jobs may benefit from AI integration, but the other half may see key tasks that are currently performed by humans being executed by AI applications, the post said.
These changes could result in lower labor demand, reduced wages and decreased hiring, per the post.
In June, Citi said that AI could impact more than half of all finance jobs, with 54% of those jobs having a higher potential for automation and another 12% having the potential to be augmented by AI.
Other industries with a high potential for automation include insurance (46%), energy (43%) and capital markets (40%), the bank said in a report.