Federal Reserve Meeting Minutes: Officials Warn Inflation Risks May Force Interest Rates Higher, AI Investment Emerges as New Variable.

The minutes of the U.S. Federal Reserve’s meeting, released early Thursday Beijing time, show that officials have not reached a unified view on the future policy path. If inflation remains elevated this year, further interest rate hikes will be deemed necessary; if price pressures ease soon, rates could stay unchanged. The core question guiding future actions is how long the current forces driving up prices will persist. The divergence reflected in the minutes centers mainly on how the outlook will evolve, not on whether immediate action is needed at the June meeting. Among the 18 participants, 9 projected at least one additional rate hike by December, up from zero in March. The number of participants expecting rate cuts dropped to 1 from 12 in March. The minutes, released three weeks behind schedule, indicate growing concern among policymakers about the inflation outlook. According to the records, the artificial intelligence (AI) investment boom, along with the Middle East conflict and tariff policies, is seen as a factor that could keep prices elevated and push the Fed to raise rates. Just a few months ago, AI infrastructure investment was hardly a key inflation driver in Fed discussions. Now, multiple officials note that surging spending on data center construction and computing power has emerged as a new source of demand, while the economy’s supply capacity is tightening. The minutes state: “Several participants commented that price pressures have become more broad-based, with most goods and services seeing significant increases.” More officials believe that robust business investment driven by AI infrastructure could become a new force sustaining price pressures.