Goolsbee warns AI investment boom may fuel persistent inflation

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 E...