Federal Reserve Chairman Kevin Warsh announced the formation of five task forces designed to reform the central bank, including to overhaul its conduct of monetary policy and to examine the effects of artificial intelligence.
Warsh, fresh out of his first meeting as Fed chairman, announced the “key initiative” during a press conference Wednesday afternoon. He said the five areas the task forces will work in are “central to the broad conduct of monetary policy.”
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The first task force will focus on Fed communications, the second on the Fed’s balance sheet, the third on the use and reliance on existing data sources, another will focus on productivity and jobs, and the final task force will examine the Fed’s inflation frameworks.
“These subjects are timely, consequential, and in my view worthy of a fresh look,” Warsh told reporters.
Warsh said the Fed’s monetary policy committee participants discussed the task forces and their goals over the past two days of meetings. He said that members of the task forces will be from both inside and outside the economics profession and will be supported by subject-matter specialists on the Fed’s staff.
“And they’ll have a straightforward charge — start with first principles, ask hard questions, examine current practice, consider alternatives, and ultimately propose next steps for policymaker consideration,” the new chairman said.
Warsh said he expects some changes, specifically mentioning the Fed’s summary of economic projections, which is published every other meeting and includes the Fed’s expectations for economic policy.
He said the data task force will “evaluate new information sources and consider methodological changes to improve data gathering.”
Warsh explained that the task force focused on productivity and jobs will look into AI’s impact on the labor force. Many in the industry have raised a familiar fear that the growth of AI could lead to widespread job losses.
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Warsh called for reform at the Fed during his confirmation hearing on Capitol Hill. During the hearing, he emphasized that the Fed should return to its core mandate of price stability and maximum employment, and said he thought it had strayed too far from that tight remit.
“Each task force will serve an objective shared by everyone in the system, shared by everyone around that table that I sat with over the last couple of days,” Warsh told reporters on Wednesday. “A Federal Reserve that is clear-eyed about its mission, fit for purpose, and focused on the future.”
