Fed minutes flag inflation risks; AI investment boom emerges as a potential catalyst for further hikes

Huoxing Finance reported that minutes from the Federal Reserve’s June meeting, released at 2:00 a.m. Beijing time on Thursday, July 9, showed officials remained divided on the path of monetary policy. Policymakers said additional rate increases would be warranted if inflation stays elevated this year, while a rapid easing in price pressures could justify keeping rates unchanged. A key focus for the next steps is how long the current forces pushing prices higher will persist. The minutes suggest the differences were chiefly about how the outlook may evolve, not about whether immediate action was needed after the June meeting. Of the 18 participants, nine projected at least one rate hike by December, up from zero in March. The number expecting rate cuts dropped sharply, from 12 in March to one. Released three weeks later than usual, the record points to rising concern over the inflation trajectory. It also shows the Fed increasingly viewing the AI investment boom alongside Middle East conflicts and tariff policies as factors that could keep prices elevated and potentially lead to further tightening. Only months earlier, AI infrastructure spending was barely discussed as a meaningful inflation driver. Several officials pointed to a surge in data center construction and computing outlays as a new source of demand, at a time when the economy’s supply capacity appears increasingly stretched. The minutes noted that "several participants commented that price pressures have become more broadbased, with substantial increases observed across most goods and services." More officials also said AI-driven business investment could become a new force sustaining inflation pressures.