Fed Minutes Suggest Another Rate Hike... and AI Drives Up Core Inflation

The minutes of the US Federal Reserve Open Market Committee meeting, held on September 15 and 16, showed that members acknowledged the need to act in the face of persistent inflation, with most expecting another interest rate hike before the end of the current year.

Several members noted that the impact of building data centers and artificial intelligence infrastructure on core inflation is escalating, at a time when the effect of tariffs on prices is waning, presenting a new driver for the monetary policy committee.

The minutes are the central driver this week for hawkish repricing in interest rate markets and bond yields, which was directly reflected in gold and mining company stocks.

Investors in Arab and global markets are closely watching these developments because the trajectory of US interest rates determines global borrowing costs and dollar movements, two factors that influence commodity prices and financial markets in the region.

What do these terms mean?

Meeting Minutes: An official record published weeks after the central bank meeting, detailing what transpired without naming the speakers.

Core Inflation: A measure of price increases that excludes volatile food and energy prices to provide a clearer picture of the true inflation trend.

Rate Hike: A measure taken by a central bank to raise borrowing costs in order to curb inflation, typically strengthening the local currency.