Bloomberg Talks Betsy Duke Talks Inflation, Federal Reserve
Oct 24, 2025
Join former Federal Reserve Governor Betsy Duke as she dives into the complexities of inflation and monetary policy. She emphasizes that inflation above 3% poses a risk to the Fed's credibility and discusses the impact of AI on job mismatches. Betsy also highlights the effects of current fiscal policies, tariffs, and immigration on the economy, while questioning the effectiveness of rate cuts amid a downshift in payrolls. Her insights shed light on the challenges facing the Fed and the importance of reliable data in decision-making.
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Credibility At Risk From Persistent Inflation
- Betsy Duke argues persistent 3%+ inflation for years would erode Fed credibility by anchoring higher expectations.
- She warns that long stretches above target make it hard to claim policy is appropriately tight.
AI Not A Fed Panacea Yet
- Duke says the Fed is not banking on AI-driven productivity gains to reduce inflation yet.
- She expects AI's effects on inflation to be uncertain and not central to current Fed policy.
AI Will Complicate Labor Market Signals
- Duke expects AI to complicate labor market assessment due to worker-job mismatches.
- She notes new graduates won't fill jobs left vacant by immigration reductions and deportations.