New York Fed President John Williams said it could take more than two years for the supply of AI equipment to meet demand, which could intensify inflationary pressures.
Williams made the remarks in an interview with Bloomberg on Tuesday, noting that the development of AI infrastructure is driving up prices for chips and the products that use them.
Asked whether the balance between supply and demand in AI would become more balanced over the next two years, Williams said: “I think it will take longer. That assumes demand momentum continues in line with expectations, which is a major assumption.”
Williams’ remarks came after he reaffirmed his view that the US Federal Reserve may have to raise interest rates once more this year as it seeks to bring down inflation.
“I have not changed my view that another rate increase may be appropriate.”
At the same time, Williams said that when it comes to 2027, “we’ll have to see,” adding: “I don’t think I have any reason to believe right now that we’ll need to do more.”
Meanwhile, Williams said he expects investment in AI to remain high even with higher interest rates.
“I think investors in this space are relatively price-insensitive,” he said. “They believe this will lead to enormous productivity growth and sweeping transformations in our economy. And I think this is not entirely independent of interest rates, but I don’t expect monetary policy to have a truly profound effect on it.”
A shortage of AI equipment could affect bitcoin miners expanding into the sector, as they compete for chips and power infrastructure.
IREN signed new AI cloud services contracts worth $2.8 billion in July, and Cointelegraph reported on Monday that miners pursuing AI projects are already facing significant financing needs, while lenders are becoming increasingly selective.