Economists Call Data-Center Spending a Third Inflation Wave

The AI boom's inflation bill arrived before central bankers could agree on what to do about it — and the ECB's Sintra forum opening June 29 is where the world's monetary authorities will finally confront a shock Wall Street priced as growth and Main Street is already paying.

Why now: On June 28, the Bank for International Settlements published its Annual Economic Report warning the AI buildout could end in a financial bust. On June 29, Euronews reported economists are branding the same spending spree a "third wave of inflation" — after pandemic supply shocks and tariff pass-through — already rippling through MacBooks, game consoles, and power bills. Sintra's three-day forum on innovation and stability opens tonight in Portugal.

The Basel alarm:

• BIS General Manager Pablo Hernández de Cos said the message was one of "urgency" and warned: "Policymakers must act now. Delay will only make the necessary adjustments more costly."
• The five largest hyperscalers are on track to commit more than $1 trillion to AI infrastructure across 2025–2026, outstripping free cash flow and pushing some into heavy borrowing.
• BIS chief representative for Asia Zhang Tao warned that reliance on non-bank channels — hedge funds, private credit — means an AI downturn could unwind faster than a traditional banking crisis.

The inflation wave, not the theory: The Wall Street Journal reported the data-center boom is driving a third inflation wave that could persist for years — unlike tariffs or oil shocks that eventually fade. NABE's June survey found 81% of economists expect the AI buildout to add to inflation over the next year. NABE President Gregory Daco, EY-Parthenon chief economist, told the Journal: "In the first phase of any major technological revolution, you tend to have a strain on limited resources, and that tends to put upward pressure on prices."

• Apple raised Mac and iPad prices 15–25% on June 25, citing an "extraordinary surge in demand for memory and storage." CEO Tim Cook told the Journal the chip crunch was a "hundred-year flood" and that "price increases are unavoidable."
• Nintendo, Microsoft, and Sony have raised device prices. Wholesale electronic components were up 27% year-over-year last month, per Labor Department data cited by analysts.
• Goldman Sachs expects data centers to account for nearly half of U.S. electricity-demand growth through 2030, with consumer power prices rising roughly 6% annually through 2026–2027.

Sintra's agenda: The ECB Forum on Central Banking opens June 29 in Sintra with Christine Lagarde's dinner speech at 20:00 CET. Tuesday brings the forum's centerpiece on AI:

• Panel 1: "Artificial intelligence and financial stability" — chaired by ECB board member Isabel Schnabel, with Tobias Adrian (IMF), Sarah Breeden (Bank of England), Itay Goldstein (University of Pennsylvania), and Torsten Slok (Apollo).
• A conversation with Aaron Chatterji, OpenAI's chief economist, and ECB board member Philip R. Lane.
• Wednesday's policy panel includes Fed Chair Kevin Warsh, Lagarde, Andrew Bailey, and Tiff Macklem.

The market math problem: Columbia economist Stijn Van Nieuwerburgh estimates the global AI buildout could cost $8 trillion over six years. The BIS compares today's boom to canal mania, railway mania, and the dot-com bubble — genuine breakthroughs that attracted more capital than returns could justify. Circular financing — chipmakers taking equity in AI labs that buy their chips — recycles the same money as revenue while hiding the burn.

Convina's view: Silicon Valley sold AI as disinflationary productivity arriving any quarter now. Basel and the NABE just said the bill comes first — in memory chips, power bills, and private-credit leverage the banking system barely supervises. Sintra exists because central bankers know both risks are real at once: the crash if returns disappoint, and the inflation if the buildout keeps winning the chip queue. The industry begged Washington for rules after the guest-list era; it may soon beg central bankers for patience after the inflation era.