Warsh Opens AI Conference as Fed Sees Buildout Driving About 25% of Excess Inflation
Updated
Updated · The Washington Post · Nov 13
Warsh Opens AI Conference as Fed Sees Buildout Driving About 25% of Excess Inflation
3 articles · Updated · The Washington Post · Nov 13
Summary
Monday’s San Francisco conference will let Fed Chair Kevin Warsh revisit his view that AI can curb inflation, even as he looks increasingly isolated inside the central bank.
Bowman said this week the AI buildout accounts for roughly a quarter of the excess inflation the Fed is fighting, while Waller cited research tying AI demand and high energy prices to pressures that may not fade soon.
October data reinforced that shift: electricity prices jumped and smartphone prices posted their biggest monthly increase since 2019, reflecting heavy demand for data centers, chips and skilled labor.
That debate matters for policy because the Fed already raised rates in September and several officials expect another increase in December if AI-driven spending keeps pushing the economy beyond capacity.
Warsh still argues AI’s price effects may be temporary and eventually offset by productivity gains, but some economists say that disinflationary payoff may not arrive until 2028 or later.