Fed chief warns of 'bumpy' AI ride as job impact unclear

While the surge in AI-related exports and investments has kept the global economy afloat amid geopolitical and energy shocks, AI's potentially negative impact on the labor market remains uncertain, a global meeting heard on Friday.

In a fireside chat at the 2026 Annual Meetings of the International Monetary Fund and the World Bank Group in Bangkok, United States Federal Reserve Chairman Kevin Warsh said that while AI will improve productivity and benefit the economy, its near-term impact on employment is uncertain.

"I would say that the advent of this new technology is probably the most consequential change to the US and the global economy in my lifetime to this point," Warsh said.

Warsh said AI will "change the real economy, but we don't know in the next 12 or 18 months its effect on employment".

Warsh said the path to realizing gains from AI is likely to be very bumpy.

"Bumpy in our understanding of the technology. Bumpy because we really don't know what the market structure is going to be of these new technologies," he said.

On realizing the benefits of AI, Warsh asked: "Who's going to get to make the money? What are the consequences for those that bet they were going to make money, but the market structure doesn't allow it?"

Warsh said that while he is optimistic about AI, that optimism is "leavened by the seriousness of purpose to the day jobs that you and I have".

The benefits and potential consequences of the rise of AI were among the main discussion themes during the weeklong IMF-World Bank meetings that started on Monday.

For example, the IMF said in its latest Global Financial Stability Report that while the AI boom is supporting economic growth, it is also creating new risks that could tighten financial conditions.

IMF Managing Director Kristalina Georgieva said AI's impact on employment is twofold: it can create new roles — with research suggesting about 10 percent of jobs are entirely new positions created by AI — while making some existing occupations obsolete or reducing them to lower-skilled tasks.

Inevitable disruption

Georgieva said that previous technological revolutions had created more jobs in the long run, but she acknowledged that short-term disruption is inevitable.

"This time, however, AI may be so capable that it could also replace some of the very jobs it creates," she said.

Georgieva also noted promises of skills retraining during previous industrial revolutions have largely gone unfulfilled, contributing to entrenched social divisions and the rise of populism.

She said the IMF is calling for a "protect people, not jobs" approach, urging governments to subsidize companies that hire displaced workers and to communicate policy changes transparently.

World Bank Group President Ajay Banga said "Big AI" requires computing power, energy, data, and specialized skills that put frontier models beyond many developing countries' immediate reach.

However, Banga said practical, or "Small AI", can help a farmer improve yields or a health worker make better-informed decisions.

He said this is why the World Bank is helping countries build the electricity, connectivity, device access, and safeguards to put those tools to work.

Banga said the future of development will depend on bringing public finance, private investment, philanthropy, and technology together around what each country needs.

"The partnership — and mix — should evolve as countries do. Where needs and risks are greatest, public and concessional finance will remain essential.

"As countries grow stronger, private investment and access to markets should play a larger role. Success arrives when we are no longer needed," he said.

Yang Wanli in Bangkok contributed to this story.