Federal Reserve Bank of New York President John Williams said that among the drivers of inflation in the United States, he’s most focused on demand driven by artificial intelligence. And if that demand persists, it could force the central bank to raise interest rates.

“If this creates a sustained impulse to demand relative to supply in inflation, I do think that’s the kind of situation where you don’t look through this,” Williams said today during an event organized by the New York Fed. If inflation ends up being more persistent and meaningfully higher than his baseline forecast, he said, “then monetary policy would need to respond to that.

“On the other hand, if it isn’t and things play out in a more benign way, I do think monetary policy is, and continues to be, well-positioned,” he said.

The Fed has kept its benchmark rate steady this year, but support for rate hikes is growing among officials. Nine policymakers penciled in at least one quarter-point hike in 2026 in their latest set of economic projections, submitted at their June gathering. At the same meeting, a few participants saw a case for raising interest rates, according to minutes released Wednesday.