Fed Warns Inflation Pressures May Persist Amid AI and Iran Risks

Federal Reserve Governor Lisa Cook has warned that inflation pressures may persist due to the impact of artificial intelligence (AI) and the US-Iran conflict. In a speech in Oakland, California, Cook stated that she expects continued inflation pressures from AI-fueled demand and the Middle East conflict. The Fed's tools to address such challenges are limited, and rate cuts could fuel further inflation.

Cook emphasized that the number and magnitude of future adjustments to the Federal Funds Rate will depend on labor market data and inflation. She expressed concerns about the potential for AI to cause a temporary rise in unemployment, but hopes that the pace of adoption will minimize net job losses.