Federal Reserve Chair Kevin Warsh will be in San Francisco next week to talk about how artificial intelligence might affect the economy and, in turn, monetary policy.
The event has been planned for a while — before the Nvidia fallout and the
midterm election outcomes. Still, AI isn’t going anywhere. The central bank continues to weigh just how much AI demand is responsible for current inflation.
Short term, there isn’t a lot of debate here: Investment in AI is boosting the price of chips, which in turn raises the prices of electronics including phones, computers and gaming consoles.
But that’s not all, said former Fed economist Ken Kuttner.
“We know that the AI buildout is putting pressure on the demand for labor, the demand for goods and services and in some places it’s actually raising energy prices,” he said.
Kuttner said the better question is whether inflation from AI demand is a short-term thing. The problem is, there’s not a lot of time to figure that out.
“It would be a much easier call now if it weren’t for the fact that we’re already well above the desired rate of inflation,” he said.
Plus, the central bank is dealing with a bunch of other problems that push up prices, like the war in Iran. | 
