Technology
Fed's Cook flags AI inflation as top 2027 risk
Livemint··2 Oct
Federal Reserve Governor Lisa Cook said Thursday she sees AI and its inflationary push as a top risk for 2027. Cook told New York Fed President John Williams that supply shocks have had surprisingly persistent effects. She joined a unanimous vote last month to raise the policy rate by a quarter point. Inflation was 3.4 percent in August.
Prism
What It Means For You
- Borrowers and businesses may face tighter Fed policy if AI-driven bottlenecks keep inflation elevated into 2027.
- Workers in sectors tied to AI infrastructure may see hiring and wages move with the build-out Cook described.
- Consumers watching mortgage and loan rates may track whether the Fed treats supply shocks differently than before.
What's Happening
- Cook said she believes AI will boost productivity in the longer term but worries when disinflation from those gains will arrive.
- Geopolitical conflict in the Middle East could also crimp supply chains, she said.
- Cook said the optimal monetary response may differ depending on which sectors a supply shock hits.
Inflation Backdrop
- Cook voted to support a timelier return of inflation to the Fed's 2 percent goal.
- She said the AI build-out may create inflationary pressures that do not resolve quickly.
- Reporting was by Ann Saphir with editing by Daniel Wallis.
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