AI boom adding to inflation pressure but analysts point to economic payoff in ‘phase two’
The Federal Reserve is among those warning the AI investment boom is an inflation risk. When will the productivity gains catch up?
The impact of AI on inflation is back in focus.
Here’s what you need to know about the key economic data releases this week.
AI-led inflation fears
Economists have been pondering over comments from Federal Reserve Bank of New York president John Williams late last week that the AI boom is his main inflation concern.
“If this creates a sustained impulse to demand relative to supply in inflation, I do think that’s the kind of situation where you don’t look through this ... then monetary policy would need to respond to that,” Williams, who is also vice chair of the Federal Open Market Committee, said.
The key takeaway from local economists has been the prominence he gave to AI in these remarks. NAB chief economist Sally Auld, speaking on the bank’s podcast, pointed out his comments to AI as a particular area of note.
