Macklem Warns AI May Push Prices Higher Through Demand Boost
- AI could raise demand more than it adds to supply in near term
- Speech makes no reference to near term interest rate outlook
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Bank of Canada Governor Tiff Macklem warned that artificial intelligence technologies may add to inflationary pressures as well as price and labor volatility in the short run.
In a Friday speech in Toronto, Macklem said strong investment in AI is boosting demand as rising equity prices and hiring add to consumption. 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.