**Bank of Canada Governor Warns AI Could Spur Inflation**
Bank of Canada Governor Tiff Macklem has raised concerns about the short-term inflationary pressures that investments in artificial intelligence (AI) might cause. He noted that AI could change how businesses set prices, with digitally intensive firms already adjusting prices more frequently.
**Key Points:**
- **Inflation and AI:** Macklem emphasized that central banks must monitor how AI affects inflation through demand, supply, and price-setting behaviors.
- **Financial Stability Risks:** While AI investments aim to enhance efficiency in banks, they could also concentrate operational risks in a few third-party providers, potentially destabilizing the financial system.
- **Job Displacement:** AI might reduce non-automated tasks, leaving some workers without sufficient job opportunities, though it could also shift workers to more productive roles.
- **Bank of Canadaâs Use of AI:** The bank is leveraging AI to forecast inflation, track economic activity, and improve operational efficiency.
Macklem concluded that understanding AI's impact on productivity, employment, and inflation is crucial as the technology continues to evolve.