About Half of FOMC Members See Need for More Rate Hikes if Inflation Persists

Concerns Rise Over Heavy AI Infrastructure Spending

Warsh Proposes Fewer Policy Meetings

About half of participants at last month’s Federal Open Market Committee meeting said additional tightening may be needed if inflation fails to slow. They also viewed debt-funded investment in artificial intelligence infrastructure as a new source of pressure on prices and financial markets.

In minutes of the July FOMC meeting released on Aug. 20, the Federal Reserve said many participants judged that tighter policy could be needed if inflation does not return to the central bank’s 2% target. Bloomberg News has reported that the Fed uses the term “many” to refer to about half of the FOMC’s 19 members. Those officials said price pressures remained broad-based and argued for a more restrictive policy stance. At the meeting, three of the nine voting members dissented from the decision to hold rates steady and favored an increase.

Some participants also expressed concern about the current wave of large AI spending by big technology companies. More companies are raising money for those investments through share sales and corporate bond issuance. The minutes said some participants warned that if earnings at AI companies grow more slowly, stock prices could fall, data-center asset values could decline and financial institutions could come under strain. The document also said Fed Chair Kevin Warsh proposed reducing the committee’s annual policy meetings to six from eight.

Hwang Jung-soo, New York correspondent, Korea Economic Daily, hjs@hankyung.com