NY Fed President: AI Demand May Force Fed to Raise Rates

New York Fed President John Williams recently said AI-driven demand is his top inflation concern. If this demand continues, the Fed may have to raise interest rates.

Williams noted that if AI demand keeps pushing up prices, it can't be seen as a short-term issue. He stressed that if inflation stays stubborn, policy will need to respond.

He also said current policy is fine if things stay calm. If core PCE rises 0.2% monthly through late 2026, inflation should hit the 2% target. Higher numbers mean inflation is stickier.