BCA Research has warned that the Federal Reserve may be underestimating the inflationary effects of the AI boom, potentially keeping interest rates too low and contributing to a stock market bubble. Chief global strategist Peter Berezin argued that growing demand for AI infrastructure is increasing costs for key inputs such as electricity, data centers, and memory chips. The warning matters because rising stock prices can boost consumer spending and risk-taking, potentially adding further inflationary pressure. BCA believes the long-term economic impact of AI remains uncertain but could lead to higher real interest rates over time. While Berezin does not view current market conditions as a bear market, he said risks include an AI capital expenditure downturn, excessive speculation, and widening economic inequality driven by AI adoption.
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