Hammack says AI spending could add to inflation

Cleveland Federal Reserve President Beth Hammack said artificial intelligencerelated investment may be contributing to inflation by keeping demand for data center infrastructure strong. In an interview with CNBC at the European Central Bank conference in Sintra, Portugal, Hammack said persistent inflation could require higher interest rates if price pressures do not ease. She pointed to strong spending by large technology firms and suppliers tied to data centers as evidence that some parts of the economy remain under limited restraint. Hammack, who votes on the Federal Open Market Committee this year, said the outlook is uncertain and that AI could have effects in both directions. The Fed recently held its benchmark rate steady while signaling the possibility of one more increase later this year.