Click here to watch Senator Blunt Rochester’s full exchange with Chair Powell.
Washington, DC – Today, U.S. Senator Lisa Blunt Rochester (D-Del.), a member of the Senate Banking, Housing, and Urban Affairs Committee, participated in a hearing titled, “The Semiannual Monetary Policy Report to the Congress,” during which committee members asked questions of Jerome Powell, Chair of the Board of Governors of the Federal Reserve System. Blunt Rochester’s questions were focused on full employment and our changing technology landscape, including the role artificial intelligence (AI) plays in the workforce.
To watch the full hearing, click here. Key excerpts can be found below:
On preserving the Fed’s commitment to full employment
Senator Blunt Rochester: “Later this year, the Fed will update its monetary policy framework to respond to today’s inflationary environment. And after years of supply shocks, housing inflation, and fiscal volatility, I hope you will remain strengthened that the Fed’s ability to navigate the more uncertain economy. And as you undertake this update, can you talk about how you are adapting the framework to these realities while preserving the Fed’s commitment to full employment?”
Chair Powell: “I’d be glad to. We made changes in the year 2020 to our framework, and those were meant to take on the special issues that a central bank faces during the era of extremely low interest rates, where rates were never very far from zero. We just barely got away from zero when we had to cut back to zero. The feeling was very much that if we had any kind of a shock, we would be back at zero for years on end, and that is not a good thing because economy can become very stagnant. So, what’s happened since then, the big thing is the interest rates are back to much more normal levels historically.
“So, our policy rate at 4.3% actually doesn’t feel like it is particularly restrictive. In other words, rates have moved way back up. That means that the effective lower bound is less of a problem, it means that the changes we made in 2020 are less relevant. They’re not completely irrelevant. We are making modifications, which we will be discussing inside of our committee between now and next meeting and in the next meeting, that will return the forecast more to what it was before the 2020 cycle.”
On the role of AI in the workforce
Senator Blunt Rochester: “I know we had a chance to talk in the past about my focus on jobs and the economy and labor. And I want to follow up on Senator Kim’s questioning, where the focus on the changing technology landscape and with artificial intelligence, generative AI, and just its impact on the economy in the labor market. How would you describe AI’s impact on the economy so far, and how is the Fed measuring it?”
Chair Powell: “The effects of AI are probably not great at this time. Generative AI, the question is how big will they be and how quickly will that happen. Anyone who has been exposed to what AI is capable of has to be pretty stunned by what it is capable of. And this is even the early days, too. What experts tell us is that in two years these things you are doing, that will be nothing compared to what we can do in two years. I think it has enormous capabilities to make really significant changes in the economy and the labor force, and it can either augment people’s productivity or it can replace people, or it can do a little bit of both, but it’s going to be something.”
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Senator Lisa Blunt Rochester represents Delaware in the United States Senate where she serves on the Committees on Banking, Housing, and Urban Affairs; Commerce, Science, and Transportation; Environment and Public Works; and Health, Education, Labor, and Pensions.