On November 21, Fed Vice Chair Philip Jefferson addressed the Cleveland Fed’s Financial Stability Conference, focusing on the rapid adoption of AI and its implications for the economy, financial stability, and regulatory oversight. Jefferson described AI as a transformative technology, but cautioned that its full effects on employment, inflation, and growth remain uncertain. Citing the Fed’s latest Financial Stability Report (covered by InfoBytes here), Jefferson noted that a significant share of market participants now view a shift in sentiment toward AI as a key risk to the U.S. financial system, warning that a sudden unwinding of optimism could tighten financial conditions and restrain economic activity.