Federal Reserve officials say they are assessing the impact of artificial intelligence on the economy, but there is still no clear sign of a fundamental shift in macroeconomic data. Daly stressed that AI’s effect on productivity will take time and that policymakers must closely monitor detailed data. At the same time, Austan Goolsbee said that if inflation returns toward the 2% target, several rate cuts could occur in 2026. After three rate cuts in late 2025, the Fed is currently taking a wait and see approach while evaluating inflation and growth data.

Indirect talks between Iran and the United States in Geneva ended with what was described as good progress, and the two sides agreed on a set of guiding principles to continue negotiations and exchange draft proposals. Abbas Araghchi said the path of the talks is positive, but a quick agreement is unlikely. Meanwhile, Trump called for an immediate deal and warned that tougher options would be considered if diplomacy fails. The main disagreements still revolve around the nuclear program, sanctions, and missile and regional issues.

The Reserve Bank of New Zealand kept the interest rate at 2.25%, the lowest level in about three and a half years, and said monetary policy will remain supportive for now. Anna Breman said the economy is still in the early stages of recovery and that premature tightening could weaken growth. Markets, which had expected faster tightening, were disappointed, the New Zealand dollar weakened and expectations for a near-term rate hike declined. The bank forecasts inflation will fall to around 2.3% by the end of 2026, with possibly only a limited increase later in the year.

Strong wage growth in Australia has intensified the inflation challenge for the Reserve Bank of Australia. The annual wage index rose 3.4% in the quarter ending in December, while public sector wages, up 4%, grew faster than those in the private sector. The labor market remains tight and unemployment is low at 4.1%, a factor that keeps price pressures elevated. Policymakers have not ruled out another rate hike in the coming months.