The Federal Reserve Board published a speech by Governor Christopher J. Waller assessing how rapidly adopting artificial intelligence could affect disruption in the economy, shifts in market power, and productivity, and setting out a policy preference for managing AI risks without slowing innovation. The remarks also describe the Federal Reserve’s internal approach as “learning by doing”, with System-wide education and experimentation with tools such as large language models and agentic AI, including applications in coding and payments. Waller pointed to early labour-market evidence, citing a Stanford study that found employment has fallen about 13 percent in occupations most exposed to AI relative to less affected occupations, with contractions mainly in support and administrative roles. He noted business feedback that retailers are cutting back call center and IT-related employment mainly via attrition, while a New York Fed survey found few reported AI-driven layoffs and more use of retraining, alongside changes in recruiting and an expectation of more AI-related hiring reductions and layoffs over time, especially for college-educated workers. On macro effects, he argued that sustained labour productivity growth above 2 percent would support higher real incomes without inflation pressure, while also highlighting AI-related risks including fraud, disinformation, bias, and cybersecurity threats. As a next step, Waller said he will convene industry leaders on October 21 as part of the Federal Reserve’s Payments Innovation Conference to discuss AI in payments.

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