Federal Reserve Chairman Kevin Warsh said he disagrees that the Fed’s rate hikes will have no impact on artificial intelligence, given the strong demand for AI and the high returns investors expect. “I was skeptical of that view,” Warsh said during a news conference. “Interest rates go unnoticed. Interest rates directly or indirectly affect almost everything.” Pershing Square CEO Bill Ackman, in a post last month on X, expressed skepticism that higher rates would reduce demand and investment in AI. “What if higher rates do not reduce demand and investment because the demand for intelligence and energy is not affected by higher rates because winning the race for superintelligence has a nearly infinite return on investment and the demand for computing will remain incalculable,” Ackman wrote? “What if the old models don’t apply to the current paradigm?” Warsh noted how credit spreads for certain assets have widened since the Federal Reserve raised rates in September, and financial conditions have tightened as investors have differentiated between technology companies and other companies to invest in. “With respect to new technology and this increase in investment, do interest rates matter? I think they do,” Warsh said. “And I don’t think they’re somehow divorced from the rest of the economy.”
