Boom tangles Fed's measures to ease inflation | Arkansas Democrat Gazette

The Federal Reserve faces a dilemma as inflation remains stubborn while key drivers of growth appear resistant to higher interest rates. The surge in AI-related investment—supported by demand for chips, data centers and the electrical systems to power them—is continuing despite borrowing costs that have climbed to multi-decade highs and rising electricity and other inputs. Economist estimates cited in the report project AI spending could exceed $10 trillion from 2025 to 2032, more than 3.6% of U.S. economic output annually. If price pressures don’t cool, policymakers may need to tighten further, potentially hurting rate-sensitive sectors like housing and the auto industry.