AI is 'juicing up' inflation, says Moody's Mark Zandi

Summary

Mark Zandi, Moody's Analytics chief economist, discusses the latest PCE inflation data, arguing that headline inflation has likely peaked due to declining oil prices. He warns that AI is adding upward pressure on prices through higher chip and electricity costs, keeping inflation sticky above the Fed's 2% target. Productivity gains from AI are expected to be slow and years away.

• Headline PCE likely peaked as oil and gasoline prices decline.
• Inflation remains sticky with AI fueling higher chip and electricity costs.
• Chip demand from AI is raising costs across consumer products.
• Productivity gains from AI have not yet materialized and will be gradual.
• Fed's 2% inflation target is still far off, with inflation not likely to return quickly.