Bank of Canada Governor Tiff Macklem indicated on Friday that the increasing adoption of artificial intelligence (AI) could contribute to inflationary pressures in the short term, according to a report from Reuters.
Macklem emphasized several key points:
“The combination of AI and a more shock-prone world suggests that inflation may be more volatile than it was during the 25 years leading up to the pandemic.”
“Central banks must remain vigilant regarding both the direct and indirect effects of AI on inflation.”
“While AI is anticipated to enhance productivity, allowing for faster economic growth without triggering inflation, there are concerns.”
“AI could potentially eliminate more jobs than it creates, leaving many individuals struggling to find new employment opportunities, which is a significant concern for society.”
“Currently, there is little evidence indicating that AI is displacing labor at a rate that would significantly reduce total employment.”
“The adoption of AI may also introduce financial stability risks, as operational vulnerabilities could become concentrated among a few third-party service providers.”
“There is significant potential for central banks to leverage AI to gain insights into consumer and business behaviors.”
Despite these remarks, there was no substantial market reaction. At the time of reporting, the USD/CAD exchange rate remained stable at 1.3565.
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