TLDR: Federal Reserve Governor Lisa Cook highlighted that artificial intelligence is poised to significantly reshape the U.S. labor market and influence price stability, both key aspects of the Fed’s dual mandate. Cook noted that AI could boost productivity, alter job tasks, and potentially eliminate some positions, while also having a complex effect on inflation. The Federal Reserve is actively studying AI’s economic implications and cautiously integrating the technology into its own operations for research and efficiency.
Federal Reserve Governor Lisa D. Cook stated on Thursday, July 17, 2025, that artificial intelligence (AI) is set to profoundly transform the U.S. labor market and influence the nation’s economic stability. Speaking at a National Bureau of Economic Research (NBER) event in Cambridge, Massachusetts, Cook elaborated on AI’s potential impact on both maximum employment and price stability, which constitute the Federal Reserve’s dual mandate.
Cook emphasized that AI, like other technological innovations, “is poised to reshape our labor market, which in turn could affect our notion of maximum employment or our estimate of the natural rate of unemployment.” She anticipates that AI will enhance worker productivity, modify the nature of job tasks, and may lead to the elimination of certain jobs. However, she also acknowledged that new types of employment, whether tasks or occupations, are likely to be created.
Regarding price stability, Cook suggested that AI could alleviate inflationary pressures by increasing productivity. She noted, “It is possible that the disinflationary effect of AI could, over time, counter any factors putting upward pressure on inflation.” Conversely, she also cautioned that “it is also possible that AI could boost prices in the interim, as adoption of the technology might require a surge in aggregate investment.” The Federal Reserve is closely monitoring these complex effects to inform appropriate monetary policy.
Beyond its economic implications, Cook revealed that the Federal Reserve is not only studying AI’s effects on the economy but is also deploying the technology internally to assist with its own work, including writing, coding, and research. “For example, we have been deepening our understanding of the capabilities of LLMs [large language models] and other machine learning models to produce economic insights,” Cook stated, adding that these findings are being documented in Fed papers.
The Fed staff are actively engaging with professionals from academia, other central banks, and industry to stay abreast of AI developments. However, Cook highlighted a cautious approach due to the technology’s current limitations. She cited, “When it comes to real-time analysis, LLMs suffer from look-ahead bias and frequently get confused by the vintage nature of economic data releases.”
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To guide AI adoption, Cook proposed several principles for organizations: establishing robust governance and risk management frameworks, educating and training staff, encouraging hands-on experimentation with AI in controlled environments, and fostering a culture of continuous learning.
