Hammack Warns AI Demand May Force 0.25-Point Fed Rate Hike
Updated
Updated · CNBC · Jun 30
Hammack Warns AI Demand May Force 0.25-Point Fed Rate Hike
3 articles · Updated · CNBC · Jun 30
Summary
Beth Hammack said "insatiable" demand for AI infrastructure is helping keep U.S. inflation too high and could require the Fed to raise rates if price pressures persist.
At Sintra, the Cleveland Fed chief cited a district manufacturer supplying data-center electrical switching, saying hyperscalers will pay almost any price and are not showing investment restraint.
Hammack said she is not hearing that current rates or credit spreads are holding large companies back, reinforcing her view that policy may need to become more restrictive.
The comments sharpen a split with Fed Chair Kevin Warsh, who has argued AI should eventually lower labor costs and prove disinflationary.
Hammack votes this year on the FOMC, which held rates steady earlier in June while projecting one 0.25-percentage-point increase this year.
The new Fed chair rejects forward guidance. Can this 'less is more' communication strategy actually help control soaring inflation?
Officials see growth in transport and construction, but borrowing costs are rising. Are these sectors strong enough to prevent a stagflationary spiral?
Producer prices are surging to record highs. How will this pipeline pressure impact consumer costs and the Fed’s fight against inflation?