President Trump’s pick for Fed chair, Kevin M. Warsh, argues that an artificial intelligence surge could clear the way for lower interest rates, calling it “the most productivity-enhancing wave of our lifetimes — past, present and future,” The New York Times reports.

Warsh says AI will be “structurally disinflationary,” but admits “the anecdotes will be there before the data,” meaning policymakers may have to “make a bet” on a productivity surge before it shows up clearly in official numbers.

So far, other Fed officials aren’t convinced.

“I expect that the AI boom is unlikely to be a reason for lowering policy rates,” Fed Governor Michael S. Barr said.

Former central banker Athanasios Orphanides added, “I don’t think we are anywhere close yet to having evidence that AI has increased potential output that significantly,” warning, “That’s why it’s tricky to use this argument to say this clearly justifies lower rates today.”

Skeptics note productivity data remains modest and volatile.

“It is important to keep in mind that it’s a noisy series,” said Yale’s Martha Gimbel.

Gimbel cautions further: “You should never hang your hat on one or two quarters of economic data, but that is particularly risky with productivity. That doesn’t mean it will never happen. It just means that change is not immediate.”

Some economists see parallels to the 1990s tech boom, when then-Fed Chair Alan Greenspan described “a very unusual era” and said, “The pickup in productivity helps to explain why inflation remains so well contained.”

But critics say today’s backdrop — including tariffs and tighter immigration — is different.

“It’s so different that it creates sufficient uncertainty that you would not want to cut rates pre-emptively,” said Deutsche Bank’s Matthew Luzzetti.

Others stress that even in the 1990s, the Fed ultimately raised rates — but not “because of productivity,” as Bank of America’s Aditya Bhave noted.

Fed Governor Lisa D. Cook has warned that with new technologies, “job destruction may precede job creation.”

Vice Chair Philip N. Jefferson noted that “persistent increases in productivity growth are likely to result in an increase in the neutral rate, at least temporarily.”

Barr added that heavy AI investment could itself push rates higher: “Demand for capital would rise, putting upward pressures on interest rates,” while stronger wage expectations could also lift rates.

As Vincent Reinhart, a former Fed economist, put it: “As a general rule, if it takes a really long time to litigate your argument, then the argument is not as convincing. That’s going to be the problem.”