Kevin Hassett, director of the White House National Economic Council, has stated that productivity gains driven by artificial intelligence should help reduce inflation. He described the recent rise in the 10-year Treasury yield, hovering around 4.6% to 4.7%, as a temporary phenomenon. Hassett maintains that AI is creating a positive supply shock that should exert downward pressure on prices. Markets interpret his statements as potentially supportive of a more dovish Federal Reserve stance regarding future interest rate cuts. Market participants will monitor Fed communications, particularly from Jerome Powell, to assess whether Hassett’s optimism regarding AI’s impact on inflation materializes.
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