Federal Reserve report indicates 'stepped-up' inflation driven by tariffs, Iran war, and AI investment

The Federal Reserve reported to Congress that U.S. inflation 'stepped up further this spring,' with price pressures from tariffs, a war-related rise in energy costs, and the booming artificial intelligence buildout contributing to elevated rates. The report, citing Reuters, stated that inflation has risen this year and remains above the Federal Open Market Committee's (FOMC) 2% longer-run objective, with the Personal Consumption Expenditures Price Index running at about double that rate as of May. Overall economic growth was described as 'moderate' through early 2026, supported by AI investment but hindered by a stagnant housing market and modest household consumption. The labor market has stabilized, with demand and supply roughly in balance, and the June unemployment rate at 4.2%.