Bonds & Rates
Home›Bonds & Rates›Central Banks›Fed chairman Warsh says AI spending could cut prices,…
Fed chairman Warsh says AI spending could cut prices, but inflation risk looms
In June meeting minutes, Fed officials highlighted AI infrastructure demand as a potential source of sustained price pressure, while the benchmark rate stayed at 3.5% to 3.75% and no rate change was signaled.
Federal Reserve chair Kevin Warsh has argued that a major AI spending push from large tech firms could boost worker productivity, lift corporate profits, and increase pay without reigniting inflation, according to Yahoo Finance.
However, Warsh’s outlook has not been shared by all Fed policymakers, with June meeting minutes showing heightened concern about inflation risks and calling out the possibility that strong AI infrastructure demand could keep upward pressure on prices for technology products and electricity, Yahoo Finance reports.
The transcript also pointed to other inflation drivers this year, including the war in Iran disrupting commercial oil shipping and lingering tariffs, while noting that policymakers paused on adjusting interest rates in either direction.
The minutes were the first for Warsh as Fed chair, and they came as the benchmark interest rate remains between 3.50% and 3.75%, where it has been since December, with Wall Street pricing in a quarter-point rate hike later this year.