Fed Officials Warn AI Raises Neutral Rate

Federal Reserve officials including Governor Michael Barr and Vice Chair Philip Jefferson said in February 2026 that AI-driven productivity gains could raise the neutral interest rate, complicating calls from the Trump administration and nominee Kevin Warsh for lower rates. Officials cited increased business investment demand and lower household savings as upward pressures; the Fed's benchmark rate currently sits at 3.5%-3.75% after three 2025 cuts.