Bank of Canada: AI could boost inflationary pressures in short-term

economictimes.indiatimes.com:

Bank of Canada Governor Tiff Macklem on Friday said adoption of artificial intelligence (AI) by businesses could add to price pressures in the short term by boosting demand, even though its full effects would not be visible any time soon.

Macklem said strong investment in AI technologies was already boosting the economy and noted surging electricity demand as new data centers are built.

«In the short run, AI could boost demand more than it adds to supply through faster productivity growth,» Macklem said in Toronto at an AI conference.

«If that happens, AI adoption may add to inflationary pressures in the near term,» he said.

With the surge in AI adoption, central bankers, whose primary mandate is to keep stable and low inflation, have been mulling how to use the technology to better predict changes in consumer prices and employment.

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