Federal Reserve officials cite $1.5 trillion in planned AI data center investments as a new inflation driver amid elevated price pressures.
Federal Reserve Governor Lisa Cook highlighted AI-related capital expenditures as a growing inflation risk, noting over $1.5 trillion in announced data center projects. The build-out, alongside robotics investments, could sustain price pressures beyond short-term factors like tariffs and geopolitical conflicts.
Inflation remains at 3.5% year over year, above the Fed’s 2% target, despite a cooler June Consumer Price Index reading. While some officials expect recent oil price spikes to be temporary, Cook described overall inflation risks as “strongly weighted” toward further increases.
The remarks follow the Fed’s June decision to hold interest rates steady, though policymakers remain divided on the inflation outlook. Markets have priced in potential rate cuts later this year, but persistent AI-driven demand could complicate the path forward.