Bessent vs. the Fed: Is AI an inflation cure or a new source of it?
AI summary
US Treasury Secretary Bessent has urged the Federal Reserve to stay "open" to AI-driven productivity gains, while the article says the Fed raised the federal funds rate target range to 3.75%-4.00% in August 2026. In the commentary, author Dr. Xi Chunying argues AI's inflation effect is phased: near term, heavy capex on data centres, power, chips and talent pushes some prices up; only longer term can productivity gains lower costs. He stresses the key is not whether firms use AI but whether they lift total factor productivity and convert it into profit and cash flow.
In-depth insight
It offers a framework for thinking about the lag between AI capex and interest rates/inflation, though it is one author's analysis rather than new data.