# Fed’s Barr Says AI Investment Is Raising Prices Before Potential Gains

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/regulation/25457
Published: 2026-09-29T16:57:51.000Z
Updated: 2026-09-29T16:57:51.000Z
Section: Regulation

> Barr backed the Fed’s Sept. 16 rate increase and said further policy adjustments may be needed as 2026 inflation projections remain above the 2% target.

Federal Reserve Governor Michael S. Barr said AI-related investment is adding near-term price pressure before potential productivity gains can ease inflation, complicating the outlook for US monetary policy.

“Risks to achieving our inflation target have increased, while risks to the labor market have receded,” Barr said in Chicago on Sept. 23.

Barr supported the Federal Open Market Committee’s decision to raise the federal-funds target range by 25 basis points on Sept. 16 to 3.75%-4.00%. He said inflation remained above the Federal Reserve’s 2% target and was not clearly moving toward it quickly enough.

“Further policy adjustments are likely to be needed,” Barr said.

The Fed’s September projections put median 2026 personal consumption expenditures inflation at 3.7% and core PCE inflation at 3.4%, measured from the fourth quarter of 2025 through the fourth quarter of 2026.

Sixteen of 18 participants placed the 2026 federal-funds-rate midpoint at 4.125% or higher. Those projections indicate the rate would rise by at least another quarter point from its present 3.875% midpoint. The median year-end projection was 4.1%.

Barr said tariffs, the conflict in the Middle East, Russia’s war in Ukraine and increased investment tied to the AI buildout were contributing to upward price pressures. Spending on data centers and related capacity is lifting near-term demand, while productivity gains remain a potential longer-term development.

He described economic growth as strong and the labor market as solid, with labor-market risks having receded. The Fed’s Sept. 16 statement also said productivity growth was strong and capital investment was robust.

Barr did not specify the timing or size of any future policy adjustment.