The selloff in artificial intelligence (AI) stocks could take some pressure off US interest rates. BMO Capital Markets senior economist Jennifer Lee said the pullback may make the Federal Reserves (Fed) inflation fight easier.
Lee shared the view on Bloomberg This Weekend on November 1. For crypto investors, it adds a second effect to a selloff that already pulled digital assets lower.
Sponsored
Sponsored
How the AI Building Boom Kept Borrowing Costs High
Last week, the Nasdaq-100 entered its third correction of 2026, while the S&P 500 fell 1.8% on Friday.
Lee told Bloomberg that hyperscalers needed large sums to build their data centers. Their demand for corporate debt was one of the factors driving interest rates higher.
Elevated energy prices and fiscal concerns added to the pressure, she said. Some holders of US Treasuries may also be less reliable buyers than before.
The building spree also drew land, skilled workers and materials away from other sectors. Lee said this crowding out added to inflation and could keep it stickier for longer.
She argued that a pullback could cool data center construction. That cooldown would help the Fed bring inflation down.
Sponsored
Sponsored
“So if they‘re pulling back a little bit, it shows that there could be some cool down in this… All this demand, all this building of the data centers, and that would actually help the Fed’s job and to bring inflation down,” Lee said.
Follow us on X to get the latest news as it happens
What It Means for Crypto
Jennifer Lees comments focus on the US economy. However, the same selloff reaches crypto through two separate channels.
The first channel is risk appetite. BitMine Chairman Tom Lee tied the recent crypto decline to the AI selloff in the companys October 26 release.
“Crypto got pulled down by the same ‘risk-off’ forces behind the AI sell-off. In contrast to late-2025 and early 2026, crypto pullbacks have been comparatively shallow. ETH has fallen 13% from its recent peak while US semiconductors ($SOXX) is down 20% in that same timeframe,” Tom Lee noted.
The second channel is interest rates, and it could push in the opposite direction. If the selloff keeps rates lower, bonds and cash would offer smaller returns. That would make assets such as Bitcoin (BTC) and Ethereum (ETH) relatively more attractive.
The two effects also arrive at different speeds. The risk-off hit lands immediately, while rate relief depends on yields staying lower for weeks.
That relief has clear limits. The Fed raised rates by 25 basis points on September 16. It then held them at 3.75% to 4% on October 28, with 2 officials voting for another hike.
Jennifer Lee called Chair Kevin Warshs press conference fairly hawkish. She added that a December tightening sounds like a foregone conclusion.
This weeks payroll report and earnings from Apple, AMD and Qualcomm will test whether the cooldown holds.
Subscribe to our YouTube channel to watch leaders and journalists provide expert insights