Former New York Fed President Warns: Wall Street May Be Completely Wrong, AI Is Creating an Interest Rate "Rollercoaster"

Odaily: Former New York Fed President Bill Dudley believes the market may currently be underestimating this "up-then-down" interest rate seesaw. He expects that the AI boom could push rates higher in the short term more strongly than investors anticipate, but if the Federal Reserve tightens further as a result, the subsequent rate-cutting cycle could also be more dramatic than what current forward markets are pricing in.

The artificial intelligence investment boom is creating an interest rate path for the Federal Reserve that differs from traditional economic cycles: in the short term, data centers and computing power capital expenditure are continuously competing for capital, driving up growth and asset prices, potentially forcing interest rates to continue rising; but once the investment peak passes or the financing chain weakens, the same force could quickly drag down the economy, prompting the Federal Reserve to pivot toward aggressive rate cuts.