Fed’s Williams says AI is now his main inflation concern

Federal Reserve Bank of New York President John Williams said that among the drivers of inflation in the US, he’s most focused on demand driven by artificial intelligence. And if that demand persists, it could force the central bank to raise interest rates.

“If this creates a sustained impulse to demand relative to supply in inflation, I do think that’s the kind of situation where you don’t look through this,” Williams said Thursday during an event organized by the New York Fed. If inflation ends up being more persistent and meaningfully higher than his baseline forecast, he said, “then monetary policy would need to respond to that.”

“On the other hand, if it isn’t and things play out in a more benign way, I do think monetary policy is, and continues to be, well positioned,” he said. 

As he monitors........

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