Also: A.I. regulations, jobs outsourced, JPMorgan recalls managing directors. 
Good morning.
Lots of news on the inflation and interest rate front yesterday. The consumer price report showed prices up only 5% over the past year. Meanwhile, minutes of the Fed’s meeting last month suggested central bankers are prepared to raise the Fed funds rate again in May to a range of 5 to 5.25%. That could mark the end of an extraordinary 13-year period of negative “real” rates—with a Fed funds rate lower than the rate of inflation. The era of free money may finally be ending.
Monetary “doves” will quickly point out that what matters is not inflation in the last 12 months but inflation in the next 12 months, and there’s a possibility that tighter credit conditions in the wake of the banking crisis will cause inflation to drop. Hawks, on the other hand, will point out that “core” inflation—minus volatile food and energy prices—actually rose 5.6% over the year, and the unemployment rate remains at a stunningly low 3.5%, which will continue to put upward pressure on wages.
I’ve argued here that history offers little reason to believe inflation can be tamed with real interest rates at zero or below. Perhaps this time is different. But if it is, it may only be because the banking crisis has given the Fed an assist, pushing the economy into recession.
Either way, the outcome is the same: expect the next 12 months to be a tough time for the U.S. economy. A correction to an era of unprecedented fiscal and monetary policy is due.
More news below. And read why Warren Buffett dumped his holdings in Taiwan Semiconductor Manufacturing (TSMC) here.
Alan Murray
@alansmurray
alan.murray@fortune.com
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What to do about A.I.
China and the U.S. both introduced new regulations for A.I. on the same day, but with different approaches. China's rules are strict, requiring A.I. models to undergo censorship before serving the public, while the U.S. National Telecommunications and Information Administration has called for comments on new rules to ensure A.I. systems work safely. Fortune
All abroad
Many companies are responding to labor shortages and rising wages in the U.S. by outsourcing jobs overseas. Economist Nicholas Bloom estimates that 10% to 20% of service support jobs could move abroad in the next decade. Although office offshoring is not a new phenomenon, companies are now sending more highly skilled jobs abroad due to difficulty hiring and obtaining visas for foreign employees. Wall Street Journal
Seniority rules
JPMorgan is requiring its managing directors to be in the office five days a week and asking other employees to meet their “in-office attendance expectations.” Other Wall Street banks, including Goldman Sachs, have also been pushing for a five-day office return. Financial Times
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