Bloomberg Surveillance · Thursday, September 17, 2026
Former New York Fed President Bill Dudley argues that the significant investment spending in AI is pushing the neutral interest rate higher. He believes this trend will continue as long as large sums are being spent on data centers and chips, and the Fed must account for this in its policy decisions.
“I think neutral is higher.”
“I mean, it's higher because we have this huge AI investment spending boom that's pushing up to neutral rate. That's increasing the demand for capital.”
“Now, if the investment spending boom comes to an end, then the neutral rate will probably drop back down.”