This was not in any public statement. It came directly from the April 28-29 FOMC minutes.
THE FIRST WAY IS INFLATION.
The Fed's own members said that strong AI investment spending is pushing up input costs across multiple industries. Every company building or using AI infrastructure is paying more for power, equipment, and services, and those costs are being passed down the supply chain.
The Fed flagged this as a direct contributor to core inflation that is separate from energy prices and tariffs. AI was supposed to reduce costs across the economy. The Fed is now saying it is adding to them.
THE SECOND WAY IS THE PRIVATE CREDIT MARKET.
Software companies that borrowed money from private credit funds are quietly deferring their interest payments using payment-in-kind arrangements, where instead of paying cash interest they just add it to the loan balance. The Fed flagged this specifically in Q4 2025 and Q1 2026.
The reason investors are pulling money out of these funds is that they believe AI will destroy the business models of the software companies inside them. Private credit funds saw net outflows in Q1 2026 specifically because of AI disruption fears. Blue Owl, one of the largest private credit managers in the world with $36 billion in its flagship fund, was forced to cap redemptions after investors tried to pull 21.9% of the fund in a single quarter.
Its technology-focused fund saw 40.7% of investors request their money back in the same period. Blue Owl halted redemptions entirely, sold $1.4 billion in loan assets, and Blackstone, Apollo, Ares, and KKR all fell 5 to 6% the same day.
The $1.8 trillion private credit market is cracking from the inside and the Fed confirmed in these minutes that AI disruption fears are the reason why.
THE THIRD WAY IS JOBS.
Multiple Fed members said that business contacts are already telling them they plan to delay or reduce hiring specifically because of AI adoption. This is not a future risk.
Companies are making those decisions right now, before AI has fully arrived, and the Fed internally flagged it as a risk that could push unemployment sharply higher very quickly.
The Fed held rates unchanged. But for the first time, their internal minutes show AI is no longer just an economic opportunity they are monitoring. It is now a source of inflation, a credit market risk, and a hiring slowdown, all at the same time.
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