The data center debate has reached the Federal Reserve. Minutes from the Fed’s September meeting released Wednesday indicate officials now see the AI infrastructure boom, more than tariffs, as a key force keeping goods prices elevated. Policymakers cited a rush of borrowing to fund data centers, chips, and related hardware as “surging AI-related investments” that could push demand beyond what businesses can supply, driving prices higher, the Washington Post reports.
They noted that core goods prices—excluding food and energy—are still rising at a brisk pace, even as the impact of past tariff hikes fades. The Fed now expects inflation to stay above its 2% goal until 2029. Just a year ago, AI was barely mentioned in Fed discussions; this year, it’s central, with officials betting it will eventually boost productivity and output, even as they admit they don’t know yet how big or how fast those gains will be. The minutes showed a split on the reasoning for raising interest rates, per Reuters. “Some participants” backed an increase to counter the effect of rising energy prices, while others contended that demand-driven inflation makes higher interest rates necessary.