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Warsh Points to Rapid AI-Related CapEx, Says Supply-side Effects Are Hard to Predict
Summary
Chair Warsh highlighted strong business investment, including nearly 20% April growth in AI-related high-tech capital expenditures, and said the Fed is still evaluating how those investments will affect supply and inflation dynamics.
Chair Warsh said the most striking feature in the economy is strong business investment, particularly in high-tech and AI-related capital expenditures, which he said is helping to sustain manufacturing output.
"In the AI related category of high tech equipment and software, the most recent data shows April growth rates of nearly 20%," Warsh said, noting that while CapEx prepares the ground for future growth, the timing and magnitude of supply-side effects on prices are hard to predict.
He cautioned that surges in demand for specific components, such as memory and logic chips, can push up prices in those sectors and complicate the committee's assessment of whether price moves reflect a broader inflationary dynamic or concentrated pressures. The Fed, he said, will continue to monitor markets and data to refine its judgment.
