Bloomberg Talks Glenn Hubbard Talks AI, Fed Independence
Nov 17, 2025
Glenn Hubbard, Dean Emeritus of Columbia Business School, shares his insights on AI's role in the economy and the importance of Federal Reserve independence. He discusses the delicate balance facing Fed leadership amid political pressures and the immediate versus long-term challenges of interest rate decisions. Hubbard highlights AI's mixed effects on jobs, its potential to both substitute and complement the workforce, and the urgency of retraining displaced workers to harness its benefits effectively.
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Fed's Dual Challenge
- The Fed faces both short-term rate tradeoffs and a longer-term institutional challenge of political pressure.
- Maintaining independence matters but the Fed also needs reforms to restore credibility.
Short‑Run Rates vs Structural Job Changes
- Short-run monetary decisions must weigh inflation against structural employment shifts like AI.
- Hubbard argues rate cuts have a weak case when job worries reflect structural change beyond the Fed's control.
AI's Mixed Labor Effects
- AI can both substitute for and complement workers and its net effect is still debated among economists.
- In the long run, Hubbard expects AI to displace many jobs but create even more, while shifting who captures value.