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Chicago Federal Reserve President Austan Goolsbee warned that the AI investment boom may be driving inflation beyond data centers and related industries, Reuters reported Tuesday, citing a Semafor interview.
Goolsbee said rising costs increasingly resemble economy-wide excess demand rather than temporary supply disruptions. He warned that investment could push economic growth above sustainable capacity and spread price pressures into services.
He said demand-driven inflation can persist and requires a prompt policy response before households and businesses come to expect continuing price increases.
Goolsbee, who does not vote on monetary policy this year, said a return to rate cuts would require evidence that inflation linked to tariffs and the oil shock is easing.
The Fed raised its benchmark rate by a quarter percentage point in September to 3.75%-4.00%, its first increase in three years, after three cuts in 2025.
Reuters reported that rate futures pointed to no increase at the October 27-28 meeting, followed by another quarter-point increase in December.
Disclosure: This article was edited by Diego Almada Lopez. For more information on how we create and review content, see our Editorial Policy.
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