In a private talk that I gave in early September, I pointed out that optimism about AI is widespread in the financial and high-tech worlds, but almost nowhere else. This struck me as odd, because those in finance should know that rising interest rates - especially longer-term rates - will complicate things. Just as tighter financial conditions have tested the scale and depth of the market’s optimism in past investment cycles, so might they do so again. Thus, I suggested that the underlying inflation outlook would be among the most important indicators to watch.

Most of those in the room looked at me like I was so...