Fed No.2: AI May Be Raising the Neutral Rate, Making 3.625% Less Restrictive

Vice Chair Jefferson argued July 16 that AI may be lifting the economy's neutral rate — the level that neither spurs nor slows growth. If so, the Fed's 3.625% benchmark is looser than it looks, challenging Chair Warsh's view that AI cools inflation and justifies cuts. Real stakes for borrowers and savers.