Federal Reserve Governor Christopher Waller warns AI investment could prolong inflation

Federal Reserve Governor Christopher Waller stated on Tuesday that demand-side inflationary pressures stemming from artificial intelligence investments could persist for two to three years. Scotsman Guide reported that Waller made the comments during a discussion at the Bloomberg New Economy Forum in New Delhi after being questioned by Saleha Mohsin of Bloomberg. [1]

Waller pointed out that significant spending commitments have already been made for the future, which will keep cost pressures active in the economy. Scotsman Guide reported that he added that expected productivity gains from artificial intelligence are still a few years away from materializing. [1]

Waller also stated on Tuesday that the convenience yield previously enjoyed by United States Treasuries is gone, according to Scotsman Guide. Waller has served as a member of the Federal Reserve Board of Governors since December 2020, following his nomination by Donald Trump and Senate confirmation. [1][2][4]

The Federal Reserve maintains an official long-term inflation target of 2 percent. As FTMQ Real Estate reported earlier, Waller previously indicated that additional interest rate increases would be required to bring inflation back down to the target level. Federal Reserve meeting minutes have also shown that central bank policymakers expect another rate hike before the end of 2026 as inflation concerns persist. [4][5]