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On October 7, San Francisco Fed President Daly pointed out that the demand for chips driven by the AI boom is spreading from high-end AI chips to a broader semiconductor market. Some companies have already secured storage chip supplies in advance and even redesigned products to reduce chip usage. She believes that the price pressures triggered by AI may not be a one-time shock and their alleviation may take longer than the one to three years typically expected by the Fed. Daly stated that she supported the Fed's rate hike in September and that whether further rate hikes are necessary will depend on whether shocks such as AI, tariffs, and energy price increases due to conflicts in the Middle East subside. If these shocks persist or compound, further policy tightening may be needed; if they are merely temporary, further rate hikes may not be necessary.
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