AI Distribution to Shape Inflation, ECB's Panetta Warns
European Central Bank Governing Council member Fabio Panetta emphasized the importance of understanding how artificial intelligence (AI) gains are distributed, as this will shape aggregate demand and inflation. Speaking at an event hosted by the National Bank of Ukraine on September 21, Panetta noted that AI is set to transform various aspects of society, including productivity and growth, labour markets, financial markets, and payment systems.
If AI mainly creates new tasks and raises expected labour income, it could lead to increased demand before the full benefits of its productivity materialize, prolonging inflationary pressures, Panetta said. He also warned that if automation dominates, weaker consumption could cause disinflationary effects to emerge sooner.