"In the short term, what's happening is we're building data centers everywhere, and that's actually putting pressure on all kinds of goods and services that go into building these things. So that's actually probably pushing inflation up."
"In the near term, you're not looking at something that would immediately call for lower rates, or that would be lowering inflation. The disinflationary benefits of AI remain theoretical for now."
"Goldman Sachs warned that consumer electricity prices could jump 6% from 2026 to 2027, driven in part by the strain data centers are placing on the power grid. Utilities requested a record $31 billion in rate increases in 2025-more than double the prior year."
Fed Chair Jerome Powell stated that the AI-driven data center boom is contributing to inflation rather than reducing it. The massive physical buildout required for data centers is creating pressure on goods and services, pushing inflation upward. Powell rejected the argument that AI productivity gains should already be lowering prices, noting that demand-side pressures currently outpace any productivity benefits. He indicated AI likely raises the neutral interest rate in the near term. The data center expansion is straining the power grid, with utilities requesting record rate increases and consumer electricity prices expected to rise significantly. Development is slowing not from reduced demand but from grid capacity constraints.
Read at Fortune
Unable to calculate read time
Collection
[
|
...
]