The Federal Reserve’s June meeting minutes are out, and they paint a clear picture: the AI boom is making inflation worse. Fed policymakers said strong demand for AI infrastructure “would likely sustain upward pressure on prices for technology products and electricity.”
This is the first set of minutes under new Fed Chair Kevin Warsh. And they show a divided committee. Nine of 18 voting members expect at least one rate hike before the end of 2026. Six want two. The central bank’s year-end PCE inflation projection jumped from 2.7% to 3.6%.
AI-related inflation has a name now — “chipflation.” It’s the rising cost of semiconductors for data centers spilling over into consumer electronics and energy prices. The more AI infrastructure we build, the more it pushes prices up.
That’s bad news for risk assets like crypto. Higher rates mean tighter liquidity, less borrowing, and more people parking cash instead of speculating.
The Fed kept rates at 3.5% to 3.75% in June. CME futures show a 70% chance they stay there at the July 29 meeting. But the hawkish dot plot suggests rates stay higher for longer.
Nick Ruck from LVRG Research told Cointelegraph that the AI buildout is “driving higher inflation through surging demand for semiconductors, energy and data centers.” He noted it could also push demand for decentralized solutions that optimize resource allocation.
Some analysts think crypto could benefit if the Fed has to step in to backstop a US equity downturn. But right now, the message from the Fed is clear: AI is expensive, and we’re all paying for it.
