Fed’s Bowman Says ‘Still Work to Do’ on Inflation
Bowman said AI-driven price pressures account for about one-fourth of above-target core personal consumption expenditures inflation, while tighter financial conditions add risk.
- Fed Vice Chair for Supervision Michelle Bowman told the Council on Foreign Relations in Washington on Tuesday that AI-related price pressures contributed to persistent inflation, noting "there is still work to do to bring inflation closer to 2%."
- AI-Related investment demand pushed prices for memory and semiconductors higher over the 12 months, as Bowman said supply cannot expand quickly to meet high-tech equipment needs. This contributed to above-target Core PCE inflation.
- Bowman expressed concern that hyperscalers' equity stakes in smaller customers create "the appearance of circular financing," while AI-related debt is on track to exceed $800 billion in 2026. Core PCE inflation persists.
- Early on November 11, futures priced an 88.5% chance of a quarter-point hike and an 11.5% chance of a half-point move. Governor Christopher Waller and Dallas Fed President Lorie Logan argued for increases, but Bowman did not endorse a December hike.
- Bowman expects Core PCE to move closer to 2% next year, though she cautioned that falling stock prices and rising bond yields have tightened financial conditions. "The benefit of additional policy tightening has to be carefully weighed against its costs," she said.
15 Articles
15 Articles
Fed’s Bowman Says AI Now Drives About a Quarter of America’s Excess Inflation
The chips fueling the AI boom now show up on the Fed's inflation ledger, and rate hikes can't touch them. One stock collects the higher prices while another pays them, and a December decision could split their fortunes.
The vice-president for the supervision of the Federal Reserve (Fed), Michelle Bowman, said on Tuesday that, at the moment, she sees signs of persistent inflationary pressures, while the conditions of the labour market seem to be strengthening. This indicates that there is still work to be done to bring inflation closer to 2%, defended the leader during the event in Washington. Exclusive material for subscribers. To have full access, access the l…
Fed Vice President of Supervision Michelle Bowman estimates that the demand for artificial intelligence equipment explained about a quarter of the underlying inflation above the target for the 12 months until September. She also warned about the sector’s indebtedness and the risks of circular financing among major technology.
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