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Mary Daly, president of the Federal Reserve Bank of San Francisco, told Axios that artificial intelligence demand could extend energy and supply shocks, keeping inflation elevated longer than the Federal Reserve typically expects.
The concern is not merely a temporary spike, but a structural shift where AI, tariffs, and higher energy costs compound to require further monetary tightening.
Daly noted that the Fed usually looks through supply shocks that fade within one to three years. However, she observes that AI-driven pressure on chip and other technology prices appears to be moving beyond that window.
"I see it less as a one-off," she said, adding that demand for AI does not seem to be declining. Instead, it appears to be increasing, suggesting relief is further out than standard models predict.
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