US Federal Reserve Chair Kevin Warsh avoided giving clear guidance on the central bank’s next interest rate decision while addressing global financial leaders at the International Monetary Fund (IMF) meetings in Bangkok, Thailand. 

His remarks came as rising energy prices, persistent inflation and higher borrowing costs create uncertainty for the global economy. Warsh expressed confidence in the US economy and highlighted artificial intelligence (AI) as a major driver of future growth.

Warsh said the Federal Reserve would no longer routinely preview its policy decisions, signalling a shift towards allowing economic data to guide market expectations.

The Fed raised its benchmark interest rate by 0.25 percentage points in September to a range of 3.75% to 4%, its first increase since July 2023. The move followed persistent inflationary pressures, with US consumer prices rising 3.7% year-on-year in September.

Warsh declined to indicate whether the Fed would raise rates again at its October meeting. He said policymakers would assess inflation, employment and economic output before making decisions.

Warsh described AI as one of the most significant economic changes of his lifetime. He acknowledged that heavy investment in AI is currently increasing demand for chips, computing equipment and other infrastructure, adding to some near-term price pressures.

However, he expects AI to improve productivity and expand the economy’s ability to produce goods and services over time. He also suggested that AI could help central banks analyse economic information more effectively and identify inflation trends sooner.

Warsh cautioned that the transition could be uneven, with uncertainty surrounding employment effects and which companies will benefit most.

Despite geopolitical tensions and higher energy costs linked to the Iran war, Warsh said the global economy had proved more resilient than he expected earlier in the year. The IMF projected global economic growth of 3.1% for 2026, although risks remain tilted towards weaker growth.

Warsh’s decision to withhold rate guidance means investors will pay closer attention to upcoming inflation, employment and growth data. For equity markets, the timing of future rate increases will remain important because higher borrowing costs can pressure valuations and corporate investment. 

Meanwhile, expectations of AI-led productivity gains could support longer-term growth prospects.

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