Fed’s Williams Warns AI Equipment Shortage May Last Beyond Two Years

New York Fed President John Williams says it could take more than two years for AI equipment supply to catch up with demand, a gap that may add to inflation. In a Bloomberg interview on Tuesday, he explained that the push to build AI infrastructure is lifting the price of chips and of the goods that use them.

Asked if the market would balance out within two years, he answered that it will likely take longer, though he called the assumption that demand keeps its current pace a big one. Williams also stood by his view that one more rate hike may be appropriate this year to bring inflation down. On 2027, he said “we’ll have to see” and that he has no reason right now to believe more hikes would be needed.

Why Higher Rates May Not Slow AI Investment

Williams expects AI spending to stay strong even with higher borrowing costs. He described investors in the sector as fairly price insensitive, since they believe the technology will bring huge productivity gains and transform the economy. Interest rates matter somewhat, he said, but he does not expect monetary policy to have a deep effect on that buildout.

Impact on Bitcoin Miners Moving Into AI

A prolonged shortage could hurt Bitcoin miners expanding into AI, since they compete for chips and power equipment. IREN signed $2.8 billion in new AI cloud contracts in July, while miners chasing AI projects already face large financing needs and lenders who are growing more selective.