The Business Times
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Bill Dudley

BILL DUDLEY IS A BLOOMBERG OPINION COLUMNIST AND SENIOR ADVISER TO BLOOMBERG ECONOMICS. A SENIOR RESEARCH SCHOLAR AT PRINCETON UNIVERSITY, HE SERVED AS PRESIDENT OF THE FEDERAL RESERVE BANK OF NEW YORK AND AS VICE CHAIRMAN OF THE FEDERAL OPEN MARKET COMMITTEE.

No doubt, AI is important. Yet it’s unlikely to dramatically change the nation’s long-term economic outlook.

Will AI be an economic net positive? Probably not

US President Donald Trump (above) keeps turning up the pressure on the Federal Reserve to lower short-term rates, publicly expressing his dissatisfaction with chair Jerome Powell.

America, this isn’t how you lower interest rates

Inflation expectations play a crucial role in determining the cost of fighting actual inflation. When they remain well-anchored, as in the past five years, the Fed can manage without pushing unemployment up too high.
THE BOTTOM LINE

Stagflation is now America’s best-case scenario

The federal funds rate is obsolete, tracking a market that banks mostly don’t use anymore because bank reserves are so plentiful.
THE BOTTOM LINE

The Fed’s next big policy rethink needs rethinking

If the US Federal Reserve had begun to tighten monetary policy sooner, the peak in short-term rates would likely have been considerably lower, resulting in fewer losses.
THE BOTTOM LINE

The Fed’s quantitative easing programme has cost too much

While recent US economic news has been reassuring, the economy isn't out of the woods.
THE BOTTOM LINE

A US soft landing? Even the Fed doesn’t believe it

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