Federal Reserve official Musalem cautioned that relying on a productivity surge from artificial intelligence to address high inflation is risky. He emphasized that current inflation challenges cannot be solved by potential future productivity gains. Musalem highlighted that renewed tensions with Iran are contributing to price pressures, suggesting that further interest rate hikes might be necessary if inflation persists. Musalem also noted that the Fed's benchmark interest rate, when adjusted for inflation, remains below the neutral level, indicating that monetary policy is not yet restrictive. He pointed out that the labor market is stable, but inflation is significantly above the Fed's 2% target, with long-term inflation expectations gradually rising.