Yellen Warns AI Infrastructure and Tariffs Have Reduced Rate-Cut Odds to Zero

U.S. inflation remains above the Federal Reserve's 2% target. Tariffs are raising import costs, energy supplies are constrained, and expanding investment in AI data centers and power infrastructure could stimulate both demand and prices. Former Fed Chair Janet Yellen believes these factors have reduced the scope for monetary easing, putting the path of interest rates in the market spotlight.

Yellen recently warned that the triple inflationary pressures from tariffs, energy and AI infrastructure demand have nearly eliminated the case for Fed rate cuts in 2026, leaving the probability of a cut for the full year close to zero. She also said that if the large-scale AI investment boom continues, price pressures from related construction, energy and equipment demand could keep U.S. inflation above the 2% target through 2028.