Goolsbee Blames AI Data Center Boom for Stoking Inflation Heat

Chicago Federal Reserve Bank President Austan Goolsbee isn't buying the idea that the AI buildout is free money. Speaking at a Leadership Greater Chicago event, he said the breakneck construction of data centers for artificial intelligence systems is overheating the economy and adding pressure on prices, according to The Hill. In his read, the AI infrastructure boom increasingly looks like a classic case of demand running too hot.

Goolsbee's warning came with a policy prescription: overheating doesn't fade on its own, so central banks have to act decisively at an early stage before it takes hold. The scale behind that concern is big. As of August, more than 1,500 data centers were under development across the country, Pew Research Center reported, citing Data Center Map.

Fed officials have already flagged the rapid deployment of AI infrastructure as one factor behind stubborn inflation, listing it alongside energy price spikes tied to the war in Iran and President Donald Trump's tariffs. Federal Reserve Board Governor Lisa Cook weighed in back in September, noting that data center investments soak up construction labor and energy that other sectors also need — and that growing AI spending may create price pressure in those industries too.

The backdrop is tight. Inflation sat at 3.7% in September on the consumer price index, the same month the Fed raised interest rates by 0.25 percentage points for the first time in more than three years. After holding rates steady the following month, traders put the odds of another 0.25-percentage-point increase in early December at 84.2%.