Fed governor Michael Barr: “In my base case, further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion.” On inflation making no progress: “I count only two months of data consistent with 2% core PCE inflation over the past 20 months. And I don’t yet see a clear trend toward a timely return to 2%.” Barr sketches out his thinking on AI-related developments. In the short run, it is leading to price increases that are spreading into products that require computer chips. It is also supporting consumer spending through wealth effects, he says. In the long run, he is optimistic it will boost productivity, which would mean “the economy can grow faster, and real income can grow more, without feeding to higher inflation.” The hardest part of this, for rate-setters, is assessing the next two to five years. He flags the potential for shifts in savings and investment to boost the equilibrium rate, though he says it is “too early to know if these dynamics are in play right now.” Then, he pivots to the outlook: “What is clear right now is that inflation is too high.”