Live Markets: That's why AI is going to be inflationary in the short-term
LIVE MARKETS-That's why AI is going to be inflationary in the short-term Adds new blog entry
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THAT’S WHY AI IS GOING TO BE INFLATIONARY IN THE SHORT-TERM
U.S. consumer price figures for July came in broadly as expected, although markets nudged their expectations for the Federal Reserve slightly in a dovish direction.
The bigger question, however, is what artificial intelligence, arguably the dominant theme in financial markets right now, will mean for the inflation outlook.
“We think the data continue to underscore our view that the AI investment boom is inflationary in the near-term,” Stephen Juneau, a U.S. economist at BofA, says
“AI is not only raising input costs for electronics but also driving a positive wealth effect that is supporting consumer demand,” he adds.
“The disinflationary effects of AI that (Federal Reserve) Chair (Kevin) Warsh has been touting will have to wait a little longer.”
U.S. consumer prices barely increased in July as the cost of gasoline declined for a second straight month, while underlying inflation was benign.
(Stefano Rebaudo)
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