Fed's Warsh to host forum on whether AI will cool or fuel inflation

Federal Reserve Chair Kevin Warsh will hold a public forum on Monday, November 16, in San Francisco to examine whether artificial intelligence will lower inflation, push prices up, or displace American workers, Decrypt reported.

The event will gather technology executives, economists and employers to discuss how AI is changing the economy. According to Decrypt, the conclusions could shape how the central bank thinks about interest rates, which are an important factor in Bitcoin's price as investors choose between riskier assets and safer ones.

Warsh has argued that AI could let companies produce more goods and services at lower cost, which would ease inflation without forcing the Fed to keep borrowing costs high. Some of his colleagues see it differently. They say the AI boom is already raising prices, while the productivity gains remain largely theoretical.

The reasoning is that data centers need large amounts of electricity, chips, construction materials and skilled labor, and competition for those scarce inputs lifts prices. Fed Governor Lisa Cook warned in September that AI investment was adding inflationary pressure and delaying the return to the central bank's 2% target.

The report outlines two paths for markets. If AI lets businesses produce more without higher costs, inflation could cool and leave room for rate cuts, which generally make assets such as Bitcoin and tech stocks more appealing. If AI spending keeps inflation elevated, the Fed could hold rates high or raise them, which could draw money away from speculative investments, including cryptocurrencies.

Decrypt noted that Bitcoin fell below $69,000 on Friday after inflation figures came in stronger than expected, raising concern about another rate hike.

AI also connects to the Bitcoin industry through energy. Both AI data centers and mining operations need large amounts of electricity, so miners face pressure to secure affordable power or turn to more profitable uses. Decrypt said Hyperscale Data shut down mining at its Michigan facility in September to serve an AI customer under a deal potentially worth more than $1.2 billion, and that Coreweave and other former Ethereum miners made similar moves.

Employment is another open question. Fed Governor Michael Barr warned on Thursday of possible "serious short-term disruptions" as companies hand more tasks to AI systems. Job losses could weaken consumer spending and growth and add pressure to cut rates, though a weaker economy might also lead investors to reduce risk, including in Bitcoin.

Warsh acknowledged in August that AI is "a new variable" for monetary policy. Monday's forum will not decide the Fed's next rate move, scheduled for December 9, but it may offer clues about how policymakers view the technology boom.