Macklem notes that the Bank of Canada is investigating the potential impact of AI on inflation
He cautioned against anyone claiming to fully understand AI's trajectory, noting the many unknowns about its advancement and its eventual economic and societal implications.
Bank of Canada Governor Tiff Macklem acknowledged the uncertainty surrounding the future economic impact of artificial intelligence (AI), particularly concerning the labor market and inflation, in a speech at the Economics of Artificial Intelligence Conference in Toronto.
Macklem expressed that while AI holds the potential to significantly boost productivity, leading to economic growth and improved living standards without necessarily increasing inflation, there are also more concerning possibilities.
He cautioned against anyone claiming to fully understand AI's trajectory, noting the many unknowns about its advancement and its eventual economic and societal implications. Macklem pointed out that, in the short term, investment in AI may add to inflationary pressures due to increased demand.
The governor also addressed more pessimistic scenarios, such as the risk that AI might displace more jobs than it creates or lead to decreased market competition. He emphasized the need for businesses and academics to collaborate to better understand AI's broader economic effects, highlighting that central banks are approaching the issue cautiously.
In his analogy, Macklem compared the central bank’s approach to navigating AI's potential impact to feeling one's way around a dark room, stressing the need for more clarity before making bold moves.
