Fed Governor Lisa Cook Warns AI Build-Out Risks Inflation

Federal Reserve Governor Lisa Cook identified the build-out of artificial intelligence as a primary inflationary risk for 2027. Speaking at an event with New York Fed President John Williams, Cook stated that AI development could create persistent inflationary pressures, though she maintains the technology will boost productivity in the long term.

Cook expressed concern regarding the timing of these productivity gains and the potential for new supply bottlenecks. She noted that the Federal Reserve's approach to supply shocks may need to evolve, citing that frequent disruptions, including geopolitical conflicts in the Middle East, have had surprisingly persistent effects on policy.

These warnings follow a unanimous Federal Reserve vote last month to raise the policy rate by a quarter point. The move aimed to bring inflation, which stood at 3.4 percent in August, back toward the central bank's 2 percent target.