BANGKOK -- Federal Reserve Chairman Kevin Warsh addressed world financial leaders in Bangkok as the global economy grapples with high energy prices and rising borrowing costs.
Warsh, who faces inflation pressures at home, declined to provide signals on whether the Fed would raise interest rates at its next meeting later this month. He projected positivity about the U.S.'s financial performance and hailed artificial intelligence as a generational change for the international economy.
Here are the key moments from his appearance at the International Monetary Fund meetings on Friday. He spoke with IMF Managing Director Kristalina Georgieva.
Warsh avoids signaling rate decision
The Fed chairman didn't endorse or reject colleagues' recent indications that the central bank is in no hurry to raise interest rates at its Oct. 27-28 meeting.
In September, Fed officials raised rates by a quarter percentage point to between 3.75% and 4%, the first increase in three years as the U.S. confronts rising energy prices and higher costs spurred by an AI-investment boom.
Speculation about an additional hike intensified this week after an unexpectedly firm inflation report. Consumer prices rose 3.7% in September from a year earlier, hotter than August's gain of 3.4%.
"I don't prejudge meetings. I don't believe in saying now what I might do at the meetings we have in the balance of this year," Warsh said. "It's a new chapter at the Fed, and we're not in that business anymore."
Warsh has brought a new, more limited, communication style to the Fed. He has pushed the market to respond to the economy itself rather than official signals.
Georgieva, responding to Warsh, jokingly hinted at the unease prompted by a quieter Fed. "You just disappointed half of the audience or more," she said.
Warsh touts AI's economic benefits
Warsh described AI as the "most consequential change" to the global economy in his lifetime.
The immediate future may be bumpy, he said, as the surge in AI spending pushes up prices. "We're seeing increases in aggregate demand," he said. "That just is what it is."
But in the longer run, the cutting-edge technology would be a positive supply shock, he said, increasing the economy's capacity to produce more goods and services without necessarily raising prices.
The U.S. is one of the undeniable winners of the AI boom, with tech giants pouring money into technology infrastructure across the country. Several East Asian economies, such as South Korea and Taiwan, are also benefiting from surging exports of chips and computing equipment.
"There really is a huge benefit to the global economy and the U.S. economy over the horizon," he said. Praising U.S. economic policy, he noted that the investment surge, largely driven by AI, "isn't by accident" and that the U.S.'s economic momentum is "certainly not found everywhere in the world."
Warsh acknowledges global economic pain
Warsh spoke in Bangkok as global economic pain mounts from rising borrowing costs and higher energy prices due to the Iran war. Oil prices have jumped from around $70 a barrel before the Iran war to around $105 a barrel now. Higher inflation and a surge in borrowing by AI companies has led to investors demanding higher interest rates on government bonds, especially for countries already carrying heavy debt loads.
In part because of these pressures, the IMF expects the international economy to grow 3.1% in 2026, down from 3.5% last year.
Inflation is a "common challenge" faced by countries across the world and a frequent point of discussion between central bankers at the IMF meetings, Warsh said. In response, governments are taking action with their own domestic tools, resulting in a "synchronous tightening in monetary policy." Warsh called this a "positive development."
But he said he was pleasantly surprised at how well many countries have weathered recent geopolitical uncertainty.
"Almost everywhere in the global economy is showing resilience that I'm not sure I would've predicted five or six months ago," he said.
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