Federal Reserve governor Lisa Cook expects AI investment and higher oil prices, plus supply-chain disruptions linked to the Middle East conflict, to keep US inflation under pressure in coming months. She said any further rate hikes will depend on economic and inflation data.
Cook said prices for AI-related chips, computers and software have surged with demand in those sectors, but using rate hikes to target that sector-specific inflation could be a mistake. She also cited data-center investment’s demand for construction labor and energy as a potential source of wider pressure. Electricity and water costs rose around 5% over the past year, while core goods prices were running above 3% this year.
Cook expects productivity gains to modestly lower inflation within a few years, but said they are unlikely to offset broader pressure later this year. She said there is limited evidence so far that AI has significantly changed labor-market structure. If AI temporarily raises unemployment, she said, rate cuts could fan inflation.
