Fed Governor Barr says there is a need to recalibrate policy, base case is that further policy adjustments are likely needed

Risks to achieving inflation target have increased, risks to labour market have reduced. Expects GDP growth to pick up a bit in H2 from 2% in H1 Inflation is a clear concern; Fed has been knocked off course to 2% goal. Labour marker is solid, supported by business investment and consumer spending. Does not see clear trend toward a timely return to 2% inflation. Makes sense to pencil in AI productivity boost in medium term yields but difficult to project how or when. Optimistic about AI will boost productivity in the longer-term. Too early to know if AI will push up neutral rate of interest. AI buildout likely to be strong boost to US economic activity next year or so. Prepared for serious short-term disruptions in labour market from AI. Broad productivity gains from AI may take some time.