Princeton economist worries AI could make markets more erratic

Princeton economist Markus Brunnermeier warned central bankers at Jackson Hole that widely deployed AI trading agents could anticipate policy moves, outmaneuver regulators and make markets less informative and more erratic, Reuters’ Ann Saphir reported.

Brunnermeier argued that authorities may need simpler, more robust rules, less predictable communications and direct credit-market intervention to limit manipulation.

"Remedies such as two press conferences, one carrying an anchoring narrative for humans and one addressed to machines in the form of training data, or treating AI agents as influencers, will only partially alleviate this challenge," he said, as reported by Saphir.