The Fed needs an excuse to return ZIRP. There's no way around it as the economy is now designed around cheap money and inflationary valuations. And for this specific reason I present to you AI.
The tech boom was as much influenced by silicon valley VC money as it was by the technological solutions themselves. AI fits into the same playbook. It's only rational to look at it in the same lens. The only difference is that tech has hit its limits as we are seeing with the layoffs but AI presents itself as a new vehicle to continue with the inflation.
The reason the Fed care about AI in my view is because it's new a conduit for letting loose the money printer. Once AI begins increasing economic output they'll have their missing piece for ZIRP. Without this, opening the floodgates again will be a catastrophic mistake as the inflation won't match the productivity output.
The market is not the same as the economy. We are in fact seeing rising consumer debt defaults across various types. Jobs data is not as good as it seems since there are higher percentage of part-time and low wage jobs in the numbers. Consumer spending is stagnating or down in many sectors. Hiring in consumer discretionary industries like restaurants has stagnated too. I'm not sure the economy looking that good, despite the optimism (inflation even?) in the market.
It used to be that rate going up would make asset price go down but the market got used to it.
Now the rates go down and asset prices go up and the rates go up and asset prices stay the same but rent increases.
Eh, I say just trudge right through it. The economy will adapt, as it always does. In this case I think it would be for the better.