Report: Wash's optimism about AI may not be enough to be a reason for interest rate cuts.

Federal Reserve Chairman nominee Kevin Warsh has suggested that the upcoming productivity boom could provide space for the Federal Reserve to lower interest rates, on the condition that the increase in productivity leads to low inflation economic growth. However, despite economist Ed Yardeni also predicting that technology will boost the economy in the next decade, he does not believe that this result could be a reason to lower interest rates. Yardeni wrote in a report to clients, "While we are optimistic about productivity like Warsh, we have come to a fundamentally different conclusion about what this means for monetary policy." Yardeni believes that faster growth will raise the natural interest rate, the benchmark rate that the Federal Reserve aims to neither stimulate nor restrain the economy. "If the Federal Reserve were to lower the federal funds rate below R*, the risk is that this would fuel financial speculation and instability," he wrote.