Chicago Fed’s Goolsbee Warns AI Boom Could Keep US Rates Higher

Chicago Fed President Goolsbee warned Tuesday that the artificial intelligence investment boom could spread inflationary pressure across the U.S. economy, potentially keeping interest rates higher for longer.

Demand linked to AI infrastructure is rising sharply for electricity, construction, land and equipment, pushing up costs beyond the data-center sector, Goolsbee said. The broader pressure could make it harder for inflation to ease.

If those pressures persist, the Federal Reserve may need to maintain restrictive monetary policy for an extended period or consider additional rate increases, he warned.

Goolsbee said he is increasingly concerned that the AI-driven surge reflects traditional demand overheating. The warning adds an inflation risk to the economic impact of rapidly expanding AI infrastructure investment and could affect the path of future rate decisions.