Research from the Federal Reserve, the Bank of Korea, the European Central Bank, and the London School of Economics is painting a consistent picture: AI will be inflationary first, then disinflationary.
The short-term squeeze
A St. Louis Fed report from March 2026 laid out the mechanism clearly. AI optimism is fueling massive capital expenditure in data centers, semiconductors, and energy infrastructure. That spending surge pushes prices higher in the near term, before any of the promised productivity gains actually materialize.
AI-driven data center buildout is expected to cost over $700 billion, acting as a significant inflation driver across memory chips, processors, and electricity markets.
The Bank of Korea’s analysis adds another dimension. Governor Rhee Chang-yong has emphasized South Korea’s position as a leader in AI chip production, tying semiconductor demand directly to inflation monitoring and interest rate decisions. The Bank of Korea projects that AI-related investments could account for 39% of US growth in the second half of 2026.
