AI may lead to inflationary pressures: Bank of Canada

Bank of Canada Governor Tiff Macklem highlights the potential risks AI poses to inflation and financial stability in the short term.

Bank of Canada Governor Tiff Macklem said that investments in artificial intelligence may lead to higher inflationary pressures in the short term and cause financial stability issues. 

According to Macklem, AI may also affect how businesses set prices. There is already evidence that digitally intensive firms adjust prices more often than those that are less digitally focused.

“Central banks need to be closely attuned to how AI is affecting inflation, both indirectly through overall demand and supply and directly through price-setting behavior,” Macklem said.

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Bank of Canada Governor Tiff Macklem highlights the potential risks AI poses to inflation and financial stability in the short term.
Bank of Canada Governor Tiff Macklem said that investments in artificial intelligence may lead to higher inflationary pressures in the short term and cause financial stability issues. According to Macklem, AI may also affect how businesses set prices. There is already evidence that digitally intensive firms adjust prices more often than those that are less digitally focused.“Central banks need to be closely attuned to how AI is affecting inflation, both indirectly through overall demand and supply and directly through price-setting behavior,” Macklem said.Read more