Boston Fed: U.S. May Be Headed Toward Higher Structural Unemployment, Which the Fed Can't Offset

**Boston Fed Comments (Feb 24)** The Boston Federal Reserve said on February 24 that the transition to artificial intelligence (AI) could complicate the Fed’s understanding of economic conditions. It also warned the U.S. may be moving toward higher structural unemployment—an outcome the central bank cannot offset. The Fed has long focused on economic performance across diverse groups, the Boston Fed added, noting this data is critical to gauging labor market slack. Additionally, the regional Fed urged preserving the “protective fence” that safeguards the Fed’s independence. Even as productivity rises, the central bank must still monitor inflation risks, it said, cautioning that short-term fixes could lead to bigger long-term problems. On how Fed chair nominee Jerome Powell may respond to pressure from former President Trump, the Boston Fed stated: “We will only know when the time comes.” It also emphasized Powell needs to build strong ties with Fed staff and colleagues. *Source: FXStreet*