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    3. Federal Reserve's Williams: Tariff Inflation Impact Has Peaked, No Signs of AI Investment Bubble

    Federal Reserve's Williams: Tariff Inflation Impact Has Peaked, No Signs of AI Investment Bubble

    By: rootdata|2026/08/03 11:04:18
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    New York Fed President John Williams stated that the Federal Reserve's decision to maintain interest rates in July aligns with the current economic conditions, as the labor market remains stable and economic growth is robust, showing no signs of overheating, thus there is no immediate need to raise rates. Williams noted that the impact of tariffs on U.S. inflation has largely completed its transmission, and it is unlikely to significantly push inflation higher in the coming months. He expects that inflationary pressures from energy prices and tariffs are nearing their peak, and factors driving inflation will gradually weaken. The conflict in the Middle East has led to rising oil prices, but the market generally anticipates a de-escalation, with prices potentially falling after energy trade resumes, although there remains high uncertainty in the energy market. Williams reiterated that U.S. inflation is expected to return to the 2% target level by 2028, driven by declining housing costs, easing goods inflation, and cooling core services inflation. Regarding the AI investment boom, Williams stated that there are currently no signs of a bubble, believing that AI is a transformative general-purpose technology. The current investment enthusiasm reflects market expectations for productivity improvements and new business models, but competition among different companies and technological paths may lead to market volatility in the future. Additionally, Williams mentioned that the Fed's decision to eliminate forward guidance was due to the high level of economic uncertainty, emphasizing that policy should be dynamically adjusted based on data obtained at each meeting, and the Fed will independently assess economic data to drive inflation back to the 2% target.

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