AI Could Boost Short-Term Inflation, Swiss National Bank Warns

The Swiss National Bank (SNB) is keeping a close eye on the impact of artificial intelligence (AI) on inflation, according to governing board member Petra Tschudin.

Tschudin said that AI can push inflation higher in the short term due to redirected investment flows and potential shortages, such as chip shortages leading to price increases. In the longer term, AI could lower prices by increasing productivity and making goods cheaper, but structural deflation is unlikely unless gains continuously reduce prices year over year.

The SNB projects inflation to remain within its 0-2% target through the first quarter of 2029, but this is a conditional forecast assuming no change in policy rates. Tschudin clarified that the forecast does not mean interest rates will remain at their current level for three years, and the bank will adjust policy if new inflation information emerges.