Fed’s Williams sees AI supply squeeze lasting beyond 2 years
New York Fed President John Williams’ comments came as he reaffirmed his view that the US Federal Reserve may need to raise interest rates once more this year.
New York Fed President John Williams has expressed concern that the supply of AI equipment will not catch up with demand for over two years, potentially exacerbating inflation. During an interview on Tuesday with Bloomberg, Williams stated that the expansion of AI infrastructure is driving up the prices of chips and related goods.
When asked if supply and demand within AI would become more balanced in the next two years, he replied, "I think it's going to take longer. Assuming the demand kind of impulse continues as expected, and that's a big assumption." Williams reiterated his belief that the Federal Reserve may need to raise interest rates once more this year to curb inflation, though he acknowledged the uncertainty.
He expressed confidence that AI investment will remain robust despite higher interest rates, emphasizing the transformative impact of AI on the economy. However, he suggested that monetary policy is unlikely to have a significant effect on AI investment. The AI equipment shortage could affect Bitcoin miners expanding into the sector as they vie for limited chips and power resources.
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