AI should not drive today’s interest rate decisions

The Financial Times editorial argued that central banks should not base current interest rate decisions on speculative long-term impacts of AI, such as productivity gains or inflation dynamics, due to high uncertainty. This reinforces the market view that near-term monetary policy will remain anchored to incoming data on labor markets, core inflation, and demand—rather than structural technological shifts. As a result, rate-sensitive assets like duration in government bonds and growth equities are likely to remain vulnerable to hawkish repricing if inflation prints stay elevated. The AI narrative may support risk appetite in tech-heavy indices, but its influence on policy expectations remains limited. Traders will focus on the upcoming PCE inflation report for clearer signals on the Fed’s reaction function.

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