Fed Chair Warsh Says Inflation Still Too High, Blames Apple and AI

Where Things Actually Stand on Inflation

Let's start with the numbers, because they matter. NBC News reports that inflation as measured by the Consumer Price Index hit 4.2% in May, the highest level since 2023. That's not a rounding error. That's real money gone from real people's wallets every single month.

The good news, if you want to call it that, is that Warsh told the gathering in Sintra, Portugal that "inflation risks have come down" in recent weeks. The primary reason: energy prices dropped after the United States and Iran signed a memorandum of understanding last month to end their ongoing conflict. "They're still a bit above where they were pre-conflict, but they've come down," Warsh said. So we're still paying more for gas than before a war started, but less than during the war. Progress.

European Central Bank President Christine Lagarde, also speaking in Sintra, largely agreed with Warsh's read. She said the risks to inflation and economic growth are "probably more broadly balanced" now than they were a few weeks ago. When the global central banking establishment agrees on something, that's not nothing. It's also not a solution.

Apple Jacked Up Its Prices and the Fed Is Watching

Here's where it gets genuinely weird. One of the specific inflationary pressures Warsh flagged is the AI-driven explosion in demand for computer hardware. According to NBC News, companies like Microsoft, Meta, Alphabet, and Amazon are racing to build data centers around the world, which is sending the prices of computer equipment and memory through the roof.

The downstream effects are landing on regular consumers. PlayStation and Xbox have both raised prices. But the big one came Thursday, when Apple hiked prices on many of its laptops, desktops, iPads, Apple TV devices, and HomePod speakers. The iPhone, Apple Watch, and AirPods were spared for now, though NBC News notes that analysts project those could be next. So if you were planning to buy a MacBook, that plan just got more expensive. You can thank the AI gold rush for that.

This is the part where the economy starts to feel like a Rube Goldberg machine. Tech giants need data centers. Data centers need chips. Chips get expensive. Apple raises laptop prices. The Fed has to figure out whether to raise interest rates in response to laptop prices driven up by data center construction. The American consumer, as always, sits at the very bottom of this contraption and absorbs whatever falls.

Warsh Is Very Optimistic About AI Jobs (The Data Is Less Sure)

Warsh went full techno-optimist when asked whether AI poses a long-term threat to employment. "Who knew when the internet was born that the internet was going to create a million and a half jobs as Uber drivers?" he said, which is a sentence that contains a lot of irony if you've ever tried to make rent as a gig worker.

He called AI a "big paradigm shift" and predicted "the jobs will be greater, prosperity will be stronger." He compared the current moment to the first or second inning of a revolution. This is a comforting way to talk about a technology that a growing number of economists and corporate executives believe will displace workers at a scale we haven't seen before.

To be fair, NBC News did note one data point in Warsh's favor: a study from financial operations firm Ramp found that companies spending more on AI are also growing their workforces. One study. In the first or second inning. We'll see how the rest of the game goes.

On Trump: 'We've Been Independent for a Very Long Time'

Warsh was asked directly whether the Fed would make its rate decisions independently of whatever President Trump wants. His answer was about as blunt as central bankers get: "We've been an independent central bank for a very long time. We're going to be an independent central bank at this moment, and you're going to see no changes on that."

This matters because Trump has spent years demanding rate cuts and publicly attacking Jerome Powell, whom he also appointed, for not delivering them. Now Warsh sits in that same chair, appointed by the same man who couldn't stop complaining about his last appointee. NBC News reports that Warsh has also said he intends to break with recent Fed tradition by limiting how much communication the central bank puts out about future plans. So the message to Trump is essentially: we won't tell you what we're doing, and you don't get a vote anyway.

For now, the Fed has held rates steady through its most recent meetings. At Warsh's first meeting as chairman last month, policymakers projected a likelihood of hiking rates before the end of the year, projections Warsh pointedly downplayed at the press conference. The next rate-setting meeting is July 28 and 29. Mark your calendars.

What the Fed Is Actually Going to Do

Nobody knows, including apparently Kevin Warsh, who said flatly: "I'm not going to give you any prediction as to what we will do." This is, intentionally or not, a communication strategy. If the chairman won't tell you, nobody can front-run it.

What we do know is that the Fed is sitting on a genuinely difficult situation. Inflation is running hot. The AI boom is pumping money into hardware and infrastructure in ways that push prices up before the productivity gains show up. A war just ended but left energy costs elevated. And a president who historically cannot resist trying to bully the central bank is sitting in the White House watching all of this. Warsh has a full plate.