AI Buildup Seen as Top Inflation Risk for 2027

Federal Reserve Governor Lisa Cook has expressed concern about the impact of artificial intelligence development on inflation in 2027. Speaking at an event, she warned that AI buildup could lead to supply pressures and persisting price increases. This is a key concern for Cook, who participated in a unanimous vote last month to increase the policy rate by a quarter point to combat high inflation.

The current inflation rate stands at 3.4%, well above the Fed's target of 2%. Cook noted that supply shocks have had lasting effects and are becoming increasingly important in monetary policy decisions. She also pointed out that geopolitical factors, including the Middle East conflict, could further disrupt global supply chains.