Cleveland Federal Reserve President Beth Hammack said the artificial intelligence boom could be driving inflation higher, and that may require further interest rate increases to bring inflation back to target. In a June 30 interview with CNBC, Hammack noted inflation has been too high for the past five years and that persistent price pressures could mean higher rates are needed. Her comments raise the possibility that the Federal Reserve might not be done fighting inflation in 2026, which could motivate bond investors to favor short-term bonds over longer-duration ones to manage interest rate risk. The Vanguard Ultra-Short Bond ETF, which holds 1,294 bonds with an average duration of 1.0 year and an expense ratio of 0.10%, has delivered average annual returns of 3.49% over the past five years and year-to-date returns of 1.73% as of July 2.