Marketplace · Friday, September 18, 2026
Federal Reserve Chair Kevin Warsh suggested that the economy might not need to harm labor markets to achieve inflation objectives, alluding to 'immaculate disinflation.' This implies a belief that productivity gains, possibly from AI, could alter traditional economic rules, allowing for rate hikes without significant economic slowdown.
“I don't believe that we need to harm labor markets to achieve our objective, but we can do, you know, forget immaculate conception, we can do immaculate disinflation, the whole grail of economics.”
“And so that's what he means by not yet restrictive, that we are not in a place where hiking rates is causing people not to take out loans or to start businesses or to really change their objectives.”
“the benefits of AI and the productivity gains are so great that the the real and the normal rules of economics won't apply and we can do a rate hike or even several.”