In an interview with CNBC during a European Central Bank (ECB) conference in Sintra, Portugal, on June 30, Hammack stated, "Inflation is too high and has remained elevated for the past five years."
Hammack indicated that if inflationary pressures persist, further interest rate hikes could be necessary. She remarked, "If this situation continues, we may need higher rates to bring inflation back to the Federal Reserve's target."
She identified AI infrastructure investment as a significant factor influencing prices. Citing a local manufacturer of power switching devices for data centers, Hammack explained, "The demand for AI-related facilities is extremely strong."
The manufacturer reported a steady stream of orders from major data center operators. Hammack noted, "These companies are willing to pay virtually any price for input costs and are eager to secure products as quickly as possible."
Hammack also mentioned that she has not heard of large corporations hesitating to invest and grow due to high interest rates or financing costs, suggesting that AI-related investments remain robust despite elevated rates.
Her comments contrast with those of Federal Reserve Chair Kevin Warsh, who has suggested that AI could boost productivity and reduce labor costs, ultimately lowering prices in the long run.
Hammack acknowledged that AI could have a dual impact on prices. While productivity improvements could lower costs, infrastructure investments could exert upward pressure on prices.
Hammack will participate in voting at this year's Federal Open Market Committee (FOMC) meetings. Her remarks highlight that the AI investment boom is becoming a variable in the Federal Reserve's inflation assessments and monetary policy discussions.
* This article has been translated by AI.
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