San Francisco Federal Reserve President Mary Daly told Axios that demand for AI hardware could keep pushing prices up longer than the one to three years the Fed typically expects a supply shock to last. “It doesn’t seem like the demand for AI is going down. If anything, it’s going up,” she said, noting that companies are already seeking forward contracts for memory chips and redesigning products to use fewer of them. Daly described three pressures that could reinforce one another: AI hardware, tariffs and energy costs. She said the Fed’s latest move “seemed completely necessary at this juncture to respond to inflation risks going up,” and that whether more will be needed depends on whether those shocks prove temporary or compound. For borrowers, that suggests relief on rates may take longer to arrive.
Sources: Axios.