Fed Policymakers Split as AI Productivity Emerges as Key Rate-Cut Variable

The U.S. Federal Reserve targets inflation of 2% over the longer run, and its rate path affects funding costs worldwide. Cathay United Bank said high oil prices and supply-chain disruptions would push up prices in the short term. Anue Fund said AI-driven automation could boost productivity and reduce unit and service costs, making it an important variable for medium- to long-term inflation and the scope for rate cuts.

In April 2026, the Federal Open Market Committee voted 8–4 to keep the federal funds rate at 3.50%–3.75%, producing a rare three-way split not seen in nearly 34 years. At new Chair Kevin Warsh's first meeting on June 18, the committee again held rates steady, this time unanimously. The dot plot eliminated rate cuts for the year and raised the median year-end rate projection to 3.8%, while the consumer price index rose 4.2% year on year in May.