BIS Warns AI Boom Could Skew Rate Decisions as US Data-Center Spending Hits 0.8% of GDP
Updated
Updated · Financial Times · Jul 28
BIS Warns AI Boom Could Skew Rate Decisions as US Data-Center Spending Hits 0.8% of GDP
3 articles · Updated · Financial Times · Jul 28
Summary
BIS economists said AI is distorting the signals central banks use to judge growth and inflation, increasing the risk of policy miscalibration as officials decide where interest rates should be.
0.8% of US GDP is now tied to spending on data centers and IT manufacturing, the BIS said, while AI-driven equity gains are lifting household wealth and could already be adding near-term price pressure.
The same boom could later turn disinflationary if AI lifts productivity or weakens wage bargaining through job-loss fears, but the BIS said those longer-term effects remain uncertain and hard to measure.
The warning lands as the Federal Reserve opens a two-day policy meeting with inflation still running at more than double its PCE target and debate intensifying over whether AI justifies lower borrowing costs.
ECB chief economist Philip Lane has also called AI's inflation impact a major challenge, citing uncertainty over labor displacement, power demand, geographic concentration and the pace of adoption.