- Artificial intelligence may increase inflation short-term due to high investment demand
- Chip shortages from AI-related semiconductor demand could raise prices temporarily
- AI could lower prices long-term by boosting productivity but deflation impact is uncertain
Artificial intelligence could add to inflationary pressure in the short term as surging investment in the technology strains supplies of key components, Swiss National Bank governing board member Petra Tschudin said.
Tschudin said the SNB is closely assessing how AI could affect prices, with the technology capable of pushing inflation in either direction. She made the comments in an interview with Swiss newspaper Finanz und Wirtschaft.
A major concern is the way AI is redirecting investment. Heavy spending on AI infrastructure could draw capital and resources away from other parts of the economy, creating adjustment pressures.
Chip shortages are another potential source of inflation. Strong demand for semiconductors linked to AI could tighten supply and push prices higher, creating upward pressure on inflation over the short and medium term.
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The impact could change over time. Tschudin said AI may eventually reduce prices by raising productivity and making goods cheaper. However, she questioned whether those productivity gains would be large and persistent enough to produce a broader deflationary effect.
Because inflation measures annual changes in prices, a sustained decline would be needed to create a lasting deflationary impact. Tschudin also noted that productivity gains are not new and do not automatically result in structural deflation, as per the Reuters.
Her comments come as policymakers globally assess whether AI driven productivity gains will translate into lower inflation. IMF chief economist Silvana Tenreyro has also warned that higher productivity from AI may not necessarily reduce price pressures.
For Switzerland, the SNB currently expects inflation to remain within its 0% to 2% price stability range through the first quarter of 2029. The central bank's policy rate currently stands at 0%.
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Tschudin stressed that the inflation outlook should not be interpreted as a commitment to keep interest rates at zero for the next three years. The forecast assumes the policy rate remains unchanged.
She said the SNB would adjust monetary policy if new information materially changes its assessment of inflation. The central bank does not publish forecasts for future interest rates.
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