Fed officials warn AI data center boom could prompt new rate hikes

Federal Reserve officials Austan Goolsbee and Tom Barkin have warned that persistent inflation and surging investment in artificial intelligence infrastructure could complicate the central bank’s approach to monetary policy. Both officials highlighted the potential need for further interest rate increases. Austan Goolsbee, President of the Federal Reserve Bank of Chicago, identified the rapid growth of AI data centers as a new source of inflationary pressure across the US economy. He drew comparisons between this development and traditional instances of demand-driven overheating. Speaking at an event in Chicago, Goolsbee argued that the central bank must confront inflation pressures linked to significant spending on AI infrastructure projects and rising service prices not directly affected by energy or tariff costs.

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