John Williams, President of the Federal Reserve Bank of New York, stated on July 9 (local time) that he is closely monitoring artificial intelligence (AI)-related demand as a key factor potentially fueling inflation in the United States.

Williams indicated that if such demand persists, it could lead to interest rate hikes.

According to Bloomberg, he said at an event hosted by the New York Fed that day, "If (AI) continues to stimulate demand relative to supply in terms of inflation, that is a situation that cannot be ignored."

He stated that if inflation persists longer than the baseline forecast and rises to a significant level, "monetary policy will have to respond to it."

However, Williams added, "Conversely, if the situation unfolds more moderately, I believe the current monetary policy remains in an appropriate position."

Regarding the recent launch of a task force to review the Federal Reserve's communications, balance sheet, and inflation models, announced by former Fed Governor Kevin Warsh, Williams assessed it as a "unique and timely" opportunity to examine core areas of the Federal Reserve.

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