Cleveland Fed's Beth Hammack warns AI is fueling inflation, rate hikes possible

Cleveland Federal Reserve President Beth Hammack warned Tuesday that demand for artificial intelligence infrastructure is contributing to inflation and that interest rate increases could be necessary if elevated prices persist.

Speaking to CNBC's Sara Eisen at the European Central Bank Conference in Sintra, Portugal, Hammack said, "We've got inflation that's too high, and it's been too high for the past five years. When I look at policy, if that continues, it may mean that we need higher interest rates to bring inflation back down to target."

Hammack pointed to a manufacturer in her district that produces electric switching for data centers as an example of AI-driven price pressure. "What they say is that the demand is insatiable, that these companies — these hyper scalers — will pay almost any price for those inputs, and they need things built yesterday," she told CNBC. Hammack went on to say that large companies show little sign of pulling back, and that neither borrowing costs nor tighter credit conditions appear to be discouraging business investment.

"If inflation continues to persist at these elevated levels and I don't see any restraint from policy, we may need to raise r

Fuente original: Yahoo Finance (https://finance.yahoo.com/economy/policy/articles/cleveland-feds-beth-hammack-warns-160912963.html)