The Federal Reserve said that artificial intelligence was a contributing factor to inflation in its June meeting minutes and cited “AI-related price pressures” as a driver of core goods inflation.
Fed Points to AI-Related Price Pressures
Minutes from the June FOMC meeting showed that Fed staff attributed higher core goods inflation to “the effects of tariffs and AI-related price pressures,” while also citing higher energy and input costs linked to conflict in the Middle East and stronger demand from the AI buildout.
The Fed added that while AI could eventually boost productivity and help ease inflationary pressures, “this effect would likely take time to materialize.”
“Ongoing strong demand for AI infrastructure would likely sustain upward pressure on prices for technology products and electricity,” the Fed said.
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Bull Theory Says AI Is Fueling Inflation
Market research platform Bull Theory, in a post on X on Wednesday, said the AI boom that has lifted semiconductor stocks 220% this year is also driving up the cost of chips, memory, electricity and data center construction.
“AI is contributing to inflation right now,” the market researcher said, adding that productivity gains from AI are likely years away, keeping interest rates higher for longer.
“Higher rates are the single biggest risk to the AI valuations the market has been pricing in all year,” it added.
🚨 THE FED JUST OFFICIALLY BLAMED AI FOR RISING INFLATION.
— Bull Theory (@BullTheoryio) July 8, 2026
In the June 16-17 FOMC minutes, the Fed's staff directly cited AI-related price pressures as a driver of core goods inflation, alongside tariffs.
Here's what the minutes say:
1. Core goods price inflation has risen,… pic.twitter.com/h1zCH14mqC
Rate Cuts Could Take Longer to Arrive
The Fed’s Desk survey showed that interest rates were expected to remain unchanged through early 2027, while market pricing expected one rate hike by mid-2027.
Last week, Cleveland Fed President Beth Hammack said that surging demand for AI infrastructure could add to inflationary pressures and potentially require higher interest rates if price growth remains elevated.
“When I look broadly, particularly around large companies, I’m not seeing a lot of restraint in the economy,” she said, adding that hyperscalers “will pay almost any price” for critical data center equipment.
Disclaimer: This content was produced with the help of AI tools and was reviewed and published by Benzinga editors.
Image via Shutterstock/ Andrii Yalanskyi
