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AI capital spending is already bidding up the price of chips and will likely lift measured prices over the next 12 months.
Federal Reserve Chairman Kevin Warsh delivered that assessment Wednesday during his second day of semiannual congressional testimony, adding a distinction policymakers have not drawn cleanly before: a one-time price increase is not the same thing as inflation.
The price-inflation distinction Warsh told lawmakers directly that he suspects AI spending will increase measured prices over the next 12 months.
"Whether that's inflationary or not, that's up to the Federal Reserve," he said, framing the policy response as an active choice rather than a mechanical outcome. His reasoning turned on supply.
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