Group therapy

"Monetary policy in an era of transformation," the theme of this year's European Central Bank forum, adorned the backdrop yesterday as three of the world's most important monetary officials began a panel. By the time the event in the Portuguese town of Sintra was over, the discussion had almost turned into a testy collective therapy session on the torments of acting in troubled political times. Two of the speakers, ECB President Christine Lagarde and Federal Reserve Chair Jerome Powell, are doing their jobs with bitter election campaigns being fought in the background. The third, Brazil's Roberto Campos Neto, is the target of repeated criticism from his country's head of state.  Lagarde, whose home nation of France faces the prospect of a far-right victory in the National Assembly vote this weekend, was perhaps most ill at ease. Asked what the ECB would do to stem market fallout, she quipped: "thank you so much for your question." Powell couldn't help laughing. "I'm not going to comment on the political situation of any of the member states, particularly those that are facing elections," Lagarde said, before repeating previously used language. "Our mandate is price stability. Price stability is obviously relying on financial stability, and we are attentive." Powell wasn't much more comfortable talking about his role, with Fed independence emerging as a campaign issue in the US election in  November. "We've been given this great responsibility and great powers and it's really important that we get it right," he observed. "We've been told to 'stay out of politics and do your job.'" The problem, as all of them know, is that political decisions, from tariffs to energy policy, all have some impact on the economy. The same goes for public finances. Powell restated that fiscal policy is a political matter, "so we don't comment on it — and particularly in advance of a presidential election." But he then acknowledged the challenges. "You can't run these kinds of deficits in good economic times for very long," he said. "We'll have to do something sooner or later, and sooner will be better than later." Campos Neto opened up the most. Recently described by Brazilian President Luis Inacio Lula da Silva as a "political and ideological adversary," the central bank chief talked about his own struggle as an independent policymaker. He described how his central bank raised borrowing costs by almost 12 percentage points — "the biggest increase in rates in an election year in the history of emerging markets" — as Lula was campaigning to win power. "If that is not a proof that you are independent and that you acted autonomously, it's difficult to find another example," he said. Looking on, Lagarde offered her praise. "There are countries where governors do exactly what Chair Powell said and yet get blamed," she said. "For some, it takes courage to do the job."  Use of artificial intelligence technology by US companies still remains modes — and there aren't yet many signs of impact on the labor market — but investments in hardware continue to accelerate, according to the latest quarterly AI Adoption Tracker report from Goldman Sachs. "While AI-related investment is not yet visible in national accounts data, manufacturers' shipments for AI-related components have continued to pick up in the US and Japan over the past quarter," the report says. Only 5% of US firms are currently using AI to produce goods and services, according to Goldman, while surveys indicate a large share of small businesses are experimenting with the technology but have yet to identify a clear use for it.