Reserve Bank Warns $115 Billion AI Buildout Could Keep Rates High as Power Costs Rise
Updated
Updated · Sydney Morning Herald · Nov 8
Reserve Bank Warns $115 Billion AI Buildout Could Keep Rates High as Power Costs Rise
3 articles · Updated · Sydney Morning Herald · Nov 8
Summary
Sarah Hunter said Australia’s AI-driven data-centre boom could keep interest rates higher for longer, with firms globally competing for scarce savings to fund rapid capacity expansion.
Data-centre investment has risen 10-fold in three years, and the RBA expects $115 billion to be spent by 2028—about 2% of GDP a year—while projects also compete with other construction for trade workers.
The bank said that surge is already reshaping its outlook: it lifted its 2026 business-investment forecast to 12% from 0.8% in May, and warned data-centre electricity demand could push wholesale power prices higher.
Four new RBA research papers also found 5.3% of Australian household financial wealth—out of nearly $9 trillion—is now tied to AI-related companies, up from 2% in late 2022.
Hunter said AI has not yet materially cut overall employment, though hiring appears weaker for younger workers in highly AI-exposed jobs and the gains from the technology are likely to be unevenly shared.