Federal Reserve's Cook: Inflation will remain under pressure in the coming months as AI demand increases

Federal Reserve Governor Lisa Cook stated that in the coming months, U.S. inflation will continue to face pressure, mainly due to the growing demand related to artificial intelligence, rising oil prices, and supply chain disruptions caused by conflicts in the Middle East. However, she did not explicitly indicate a need for further interest rate hikes. Cook noted that the labor market currently "has the capacity to withstand rising interest rates," and that the extent and number of future monetary policy adjustments will depend on the economy’s response to policy actions, as well as inflation and employment data in the coming months. She said that as of August, the 12-month overall inflation rate in the U.S. was about 3.8%, still significantly higher than the Federal Reserve’s 2% target. Cook pointed out that demand generated by AI infrastructure construction will continue to add inflationary pressure in the short term. Although AI-driven productivity improvements may bring some disinflation effects in the medium term, this will not be fast enough this year to offset current inflationary pressures. She stated that so far, there is no clear evidence that AI is reshaping the labor market, but the Federal Reserve is closely monitoring the risk that it could lead to a temporary increase in the unemployment rate. Cook also mentioned that if the job market is impacted by AI in the future, the Federal Reserve's room to respond will be limited since cutting interest rates to support employment could further push up inflation.