Lisa Cook says AI spending is pushing prices higher

Federal Reserve Governor Lisa Cook said on September 28 that AI investment is adding to inflation. In Oakland, she pointed to higher prices for chips and software. She also cited rising demand for construction workers and energy.

Cook said electricity and water costs had each risen around 5 percent over the past year. She said AI may be one cause, but not the only one.

Cook gave her own view, not a new Federal Reserve decision. She did not estimate how much AI has contributed to current inflation.

Cook expects AI productivity gains to ease inflation modestly over the next few years. She does not expect the gains to arrive soon enough to offset broader price pressure later in 2026.

Cook said interest rates are a poor tool for price increases limited to one sector. Monetary policy cannot target one sector alone.

Watch whether higher chip and software costs spread to other prices. Also watch whether AI productivity gains lower prices or raise wages.