The Federal Reserve can’t agree on what AI means for the economy, and that internal debate could shape interest rate decisions for years. Chair Kevin Warsh is betting big on the idea that artificial intelligence will ultimately push prices down, not up. Not everyone at the central bank shares his enthusiasm.
The Warsh thesis vs. the FOMC skeptics
Warsh, who was sworn in as Fed Chair in 2026 after being nominated by President Donald Trump, has been consistent on this point. Back in November 2025, he described AI as “a significant disinflationary force” in a Wall Street Journal op-ed, drawing parallels to the productivity boom of the 1990s.
During congressional testimony on July 15, 2026, he doubled down. Warsh argued that one-time price increases caused by AI infrastructure buildouts should not be confused with persistent inflation. The supply side, he contended, would respond and bring costs back down.
But the minutes from the June 16-17, 2026, FOMC meeting tell a different story. Many rate-setting officials flagged that surging AI demand was creating ongoing downward pressures on technology product availability and pushing up electricity costs.
The numbers behind the AI boom
The scale of AI investment is staggering. AI-related capital expenditure grew nearly 25% in Q1 2026, with broader equipment investment rising around 8%.
According to JPMorgan Asset Management, AI-related investment contributed approximately two-thirds of US GDP growth in the first half of 2025.
Warsh himself has called the current AI phase the “first or second inning,” suggesting the US is likely the “big winner” in the global AI race. Under his leadership, the Fed has formed new AI-related task forces to address rapid technological advancements.
What this means for crypto and risk assets
For crypto investors, this internal Fed divide matters more than it might appear at first glance. If Warsh’s view prevails and the Fed adopts a patient approach to rate adjustments, that creates a favorable backdrop for risk assets broadly. If the FOMC skeptics gain enough influence, the Fed could find itself responding to AI-driven price pressures with tighter policy than markets currently anticipate.
Investors should watch the FOMC minutes closely in the coming months for signs of which camp is gaining ground.