AI Could Push Up Inflation in the Short Term, SNB Official Warns

Swiss National Bank governing board member Petra Tschudin stated that artificial intelligence can push inflation higher in the short term. [2] Tschudin explained that redirecting investment flows can cause adjustments and difficulties for the rest of the economy. [2]

She noted that shortages of components like chips can cause prices to rise, creating upward inflationary pressure in the short or medium term. [2]

The central bank is looking closely at the impact of AI on prices, noting it could have an effect in both directions. [2] In the longer term, artificial intelligence could lower prices by increasing productivity and making goods cheaper. [2]

However, International Monetary Fund chief economist Silvana Tenreyro warned in research published by Bank of England staff that AI might not lower inflation even if it boosts productivity. [2]

The remarks from SNB and IMF officials highlight a shared institutional concern that AI-driven productivity gains will not automatically translate to lower inflation. Tschudin specifically cautioned that productivity gains are not a new phenomenon and do not inherently lead an economy into structural deflation. Because inflation is calculated on an annual basis, any AI-driven price decline would have to repeat itself regularly to maintain a deflationary effect. What the sources don't address: Whether central banks plan to adjust their specific policy interest rates in response to AI-driven component shortages.