Bank of Canada trying to figure out how AI might affect inflation, Macklem says

Bank of Canada governor Tiff Macklem says there is a lot of uncertainty around how artificial intelligence could affect the economy moving forward, including the labour market and price growth.

In a speech today, Macklem says the central bank is approaching the issue cautiously to get a better understanding of how AI could affect its job of keeping inflation low and stable.

The governor says AI has the potential of increasing labour productivity, which would raise living standards and grow the economy without boosting inflation.

In the short-term, he says investment in AI is adding to demand and could be inflationary.

However, Macklem also highlighted more pessimistic scenarios, where AI could displace more jobs than it creates or lead to less competition rather than more.

The governor called on academics and businesses to work together to shed more light on the potential effects of AI on the economy.

This report by The Canadian Press was first published Sept. 20, 2024.