A recent poll of economists from the University of Chicago’s Clark Center for Global Markets shows that most experts are skeptical of the idea that a surge in artificial‑intelligence productivity will create a comfortable window for the Federal Reserve to slash borrowing costs.
The nominee for the Fed’s top job has argued that AI will trigger “the most productivity‑enhancing wave of our lifetimes,” and that the resulting expansion of output could allow the central bank to cut rates from the current 3.5–3.75% range without sparking inflation. Yet almost 60 % of the 45 economists surveyed said the AI boom’s impact on prices and rates over the next two years would be negligible, lowering the neutral interest rate by less than 0.2 percentage points.
Some respondents even warned that the immediate demand boost from AI‑related activity could temporarily raise inflation, pushing the neutral rate up instead of down. A former Fed official noted that the AI wave does not appear to be a disinflationary shock, nor does it seem highly inflationary in the near term.
Against this backdrop, the Federal Open Market Committee’s own projections anticipate only a single quarter‑point rate cut this year, keeping the benchmark rate above 3.25%. That figure stands in stark contrast to the 1% rate the nominee has said the economy needs.
The nominee has also called for a further reduction of the Fed’s balance sheet, labeling it “bloated.” The central bank’s assets have already shrunk from just under $9 trillion to $6.6 trillion as part of a three‑year quantitative tightening cycle. While most economists in the poll believe the balance sheet should fall below $6 trillion in two years, the nominee’s vision of a pre‑2008‑era size—under $1 trillion—faces criticism from those who fear that aggressive shrinkage could raise longer‑term borrowing costs and hurt housing affordability.
In short, the nominee’s dovish stance on short‑term rates clashes with his hawkish approach to the balance sheet, leaving uncertainty about how he would steer the U.S. central bank. As the political and economic landscape evolves, economists remain cautious about the promise of an AI‑driven rate‑cut boom.
