Fed officials warn AI is reshaping jobs, raising unemployment risks and limiting rate cuts' effectiveness.

Federal Reserve officials Lisa Cook and Raphael Bostic warn that artificial intelligence is causing structural changes in the labor market, potentially raising the natural unemployment rate and challenging traditional monetary policy. Cook claims AI is displacing workers, particularly in technology, and may outpace job creation, while Bostic warns that rate cuts will not address structural job losses and may fuel inflation. Both emphasize the importance of non-monetary policies such as education and workforce training in managing the transition, arguing that AI-driven productivity gains may not quickly offset labor market disruptions.