Massive investments in artificial intelligence are creating near-term inflationary pressures, complicating the Federal Reserve’s task of managing inflation. U.S. spending on AI is expected to reach 581 billion dollars this year, equivalent to 1.8% of gross domestic product. This massive capital outflow is driving up electricity prices and computer components, with DRAM chip costs potentially rising by 400% by year-end. Meanwhile, AI adoption by businesses remains limited, with only 17% to 20% of U.S. companies using the technology. The Fed must navigate between the immediate costs of this technological transition and the productivity gains promised in the long term.
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