Macklem warns AI may push prices higher through demand boost: Bloomberg
THE CANADIAN PRESS/Adrian Wyld
"AI adoption may add to inflationary pressures in the near term,” Macklem said
Bank of Canada Governor Tiff Macklem warned that artificial intelligence may add to inflationary pressures in the short run, because strong investment in the technology is boosting demand, just as rising equity prices and hiring add to consumption, Bloomberg’s Erik Hertzberg reports. Electricity demand is also “surging” because of the massive computing requirements of the technology. If those forces outweigh the expansion of productive capacity, the result may be faster price growth, according to Bloomberg, which cited a speech Macklem gave September 20 in Toronto. “AI could boost demand more than it adds to supply through faster productivity growth. And if that happens, AI adoption may add to inflationary pressures in the near term,” Macklem said, according to Bloomberg. The governor also said, however, that the productivity gains of AI adoption will boost supply and potential growth in the longer term, allowing workers’ compensation and spending to rise with fewer price pressures.
