Fed Chair Warsh Bets on AI Productivity to Offset Inflation, Colleagues Sound Alarm

Federal Reserve Chairman Kevin Warsh asserts that the $700 billion AI infrastructure push by Big Tech will drive productivity gains, boosting corporate profits and wages without fueling inflation. Yet, Federal Open Market Committee (FOMC) minutes reveal growing unease among policymakers about persistent price pressures from surging demand for data centers, semiconductors, and electricity. Despite holding rates steady at 3.50%-3.75% since December, officials now cite AI-driven supply constraints as a key risk, with Apple’s recent $150 price hikes on MacBooks and iPads underscoring near-term cost impacts. Markets are pricing in a 25-basis-point hike by year-end, reflecting skepticism toward Warsh’s optimistic productivity thesis.