Last week, I was reviewing the Minutes of the Federal Open Market Committee (FOMC) from June 16–17, 2026. I know I am about a month late, but I promise you that several points remain highly relevant. One in particular stood out: AI was identified as one of the top three drivers of inflation.
Participants noted that both core and headline inflation were being pushed higher by three factors: lingering tariff effects, supply‑chain disruptions caused by the closure of the Strait of Hormuz, and a surge in demand for goods and services tied to robust AI‑related investment.
From the minutes:
“Many participants noted that ongoing strong demand for AI infrastructure would likely sustain upward pressure on prices for technology products and electricity. Most participants remarked that growth in economic activity that exceeded that of potential output, owing in part to strong AI business investment, could contribute to more persistent inflationary pressures.”
In the long run, it is expected that AI investment will reduce production costs and increase aggregate demand. However, this shift will take time to materialize.
Another notable point is the confirmation that business investment remains heavily concentrated in AI, with capital expenditures continuing to surpass expectations.
As promised at the start, the geopolitical backdrop has not changed and AI investment continues to grow, so these observations remain fully relevant as of July 19.
https://www.federalreserve.gov/monetarypolicy/fomcminutes20260617.htm