MUSALEM said policymakers cannot rely on an AI-driven productivity boom to
alleviate persistent inf, calling that approach risky. He said the Iran conflict
has renewed upward price pressure and prompted more officials to warn that
sustained high inf could require further rate hikes. MUSALEM warned the Fed's
policy rate, after adjusting for inf, remains below the so-called neutral level
— i.e., neither restrictive nor accommodative. He added the labor market remains
firm, inf is well above the 2% target, and longer-run inflation expectations are
gradually rising.
