In remarks at Oakland Tech Week, Federal Reserve Board Governor Lisa D. Cook assessed that artificial intelligence is adding near-term inflation pressure, while its productivity benefits are likely to provide only modest disinflation within the next few years. She does not expect those gains to arrive in time to offset broader price pressures later in 2026 and warned that deeper AI adoption could produce a difficult labor market transition before raising living standards over the longer term. AI investment is lifting prices for technology, construction labor and energy, with companies having spent only a small portion of USD 2 trillion in announced plans. Cook also linked AI-driven equity gains to stronger household spending. Although unemployment and layoffs remain low, she identified early displacement in software coding, simultaneous translation and entry-level work. A skills mismatch could temporarily raise unemployment without signaling weak demand, limiting the Federal Reserve's ability to respond through rate cuts without increasing inflation risks. Cook reiterated that she supported the Federal Open Market Committee's recent 25-basis-point rate increase as total inflation reached an estimated 3.8% in the 12 months through August and core inflation reached 3.4%. Future rate decisions will depend on the economy's response to tightening and incoming inflation and labor data. She also noted that nearly half of small employer firms use AI, with 71% reporting higher productivity, and reaffirmed that supervised banks should deploy AI consistently with safe and sound practices and applicable law.

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