Fed Chairman Kevin Warsh Taps Billionaire Marc Andreessen To Lead AI Task Force

Federal Reserve Chair Kevin Warsh has named the leadership and objectives of new task forces he is convening to reshape the way the central bank conducts monetary policy.

Warsh on Thursday announced five new task forces to examine different aspects of the Fed's mission, each led by prominent and highly regarded leaders. Warsh, who was installed by President Donald Trump, has called for reforms at the Fed and how it sets some of the prominent policies that affect the housing market.

"The U.S. economy has changed significantly over the last generation, and never more so than right now," Warsh said in a statement. "Each task force will carefully consider whether policymakers' means and methods, analytical tools and policy approaches can be improved upon."

Venture capitalist Marc Andreessen and Xbox CEO Asha Sharma will co-lead a panel that assesses the economic impact of technologies like artificial intelligence. The Fed wants to determine how such technology could affect productivity and the labor market, informing future policy decisions.

Nobel laureate Thomas Sargent and former Council of Economic Advisors chair Greg Mankiw will lead a task force that examines how the Fed studies inflation. Walmart CEO Doug McMillon will co-lead a group that looks at the quality and timeliness of the data that informs the Fed's policies.

Other groups will also look at how the Fed communicates its policy deliberations, and how it examines the costs and benefits of the Fed's balance sheet strategy.

"The goal is straightforward: to ensure the Fed is best positioned to achieve our objectives in this consequential time," Warsh said.

Fed changes under Warsh

The Fed uses higher interest rates to fight inflation and lower rates to stimulate hiring, in line with the central bank's dual mandate of maintaining price stability and maximum employment.

Minutes from the June meeting of the Federal Open Market Committee, which marked the first policy meeting under Warsh, show strong difference of opinion on the future path of interest rates.

Fed leaders, more broadly, are wrangling with how the economy has evolved in recent years. Fed Gov. Chris Waller, for instance, recently said he is skeptical that the Fed should be so open about how it communicates its expectations for rate hikes.

Because mortgage rates often move based on market predictions of future Fed interest rate moves, a more opaque Fed could introduce new uncertainty and volatility into mortgage markets.

The 30-year fixed-rate mortgage now stands at 6.43%, according to Freddie Mac. That's up from 5.98% at the end of February.

But homebuyers should already be wary of attempting to predict future rates or time the market, says Realtor.com® senior economist Jake Krimmel.

"For homebuyers, the risks from trying to time interest rate movements far outweigh the rewards," says Krimmel. "Finding the right lender and best offer is a much better use of time for homebuyers than trying to time up the Fed's moves and predicting how they might ripple through financial markets."