Opinion: The AI investment boom may reignite the US economy, increasing pressure on the Federal Reserve to raise interest rates.

November 12: U.S. October inflation data came in higher than expected, indicating that the price pressures consumers face remain broad and persistent, triggering concerns among some Federal Reserve officials that more aggressive measures may be needed to curb inflation. Over the past three months, prices for computers and peripheral equipment purchased by consumers rose 25% on an annualized basis.

Smartphone prices last month posted the largest increase on record, though this coincided with the launch timing of Apple's new iPhone Duo. Meanwhile, rising data center demand has pushed up electricity demand, and U.S. electricity prices rose 0.9% in October, the largest increase in six months. Analysts at TD Securities and Morgan Stanley said these price increases are consistent with AI-related demand driving growth in demand for chips and other electronics.

The boom in data centers and related infrastructure construction is also driving overall economic growth, while Federal Reserve policymakers are currently working to ensure that strong demand does not further exacerbate inflation. Preston Caldwell, chief U.S. economist at Morningstar, said in a note to clients that recent data increase the possibility that the massive demand-side stimulus from the AI boom is heating up the U.S. economy again. If this trend continues through 2027, the Federal Reserve may need to raise rates multiple times.