Fed Governor Warns of AI-Driven Inflation Risk in 2027

US Federal Reserve Governor Lisa Cook has identified AI and its potential inflationary impact as a major concern for 2027. Speaking at an event, she noted that the increasing use of AI could lead to persistent inflation pressures.

Cook highlighted that despite the Fed's efforts to raise interest rates, inflation remains above the target rate of 2 percent, currently sitting at 3.4 percent as measured by the Fed's targeted metric.

She expressed concerns about when productivity gains from AI will lead to disinflation and warned of potential supply chain disruptions due to geopolitical considerations, such as the conflict in the Middle East.