Fed's Daly Warns AI, Tariff, and Energy Shocks Could Prolong Tight Policy

Federal Reserve policy remains strictly conditional as central bank officials assess whether inflation shocks from artificial intelligence demand, tariffs, and energy prices will compound or normalize. San Francisco Fed President Mary Daly warned that major tech hyperscalers driving AI infrastructure spending are relatively insensitive to higher interest rates, which may force policy to stay restrictive longer. Daly noted that while she supported September's rate hike, the Fed could hold rates steady if supply-driven pressures fade. Following her remarks, the S&P 500 advanced 0.82% to 7,837.44 and the 10-year Treasury yield dropped to 5.2709%.