BIS Warns: The AI Boom Is Increasing the Difficulty of Central Bank Interest Rate Decisions

PANews July 28, according to data from Jin Ten, citing a report from the Bank for International Settlements (BIS), changes in AI-related investment, trade, and asset prices are reshaping the macroeconomic outlook, making central banks’ assessments of growth and inflation more complex. BIS said that AI infrastructure investment and consumer spending may boost inflation in the short term, while improvements in productivity in the long run may produce disinflation effects.

BIS warned that if policymakers overestimate the AI productivity dividend or underestimate inflation pressures on the demand side, it could keep interest rates too low for too long, increasing inflation risk.