Two Fed Presidents Say AI Demand Is Now Lifting Broader US Inflation

Two Federal Reserve presidents have said AI infrastructure investment is pushing up prices across the broader U.S. economy. New York Fed President John Williams said AI demand is driving up semiconductor prices, construction costs, and power equipment costs enough to appear in national inflation data, and that supply is unlikely to catch up for several years. Chicago Fed President Austan Goolsbee told Semafor that AI-boom inflation is "jumping out of its lane" and beginning to affect parts of the economy beyond the AI sector itself. Williams said one more rate hike may be appropriate in 2026 but sees no need for further increases in 2027, a stance the reporting describes as less hawkish than market expectations. Goolsbee indicated the Fed would continue raising rates if inflation remains persistent. The New York Fed's survey data shows one-year inflation expectations climbed to 3.9% in September. Williams also noted that the 10-year yield above 5% is tightening borrowing conditions and making data center financing more expensive, while still expecting AI productivity gains to eventually help bring inflation down.