AI-Driven Gains Will Shape Inflation, ECB's Panetta Warns
European Central Bank (ECB) Governing Council member Fabio Panetta believes that the distribution of artificial intelligence-driven gains will shape aggregate demand and inflation. Speaking at an event hosted by the National Bank of Ukraine, Panetta noted that AI is set to transform productivity and growth, labour and financial markets, and payment systems.
Panetta also mentioned that if AI mainly creates new tasks and raises expected labour income, demand could increase before AI's full productivity benefits materialise, prolonging inflationary pressures. He added that understanding the distribution of AI-driven gains is essential for central banks to make informed decisions.
According to Panetta, credibility is an essential asset for every central bank, but how it is built and preserved depends on the nature of the challenges faced. He emphasized that central banks cannot remain on the sidelines and need to understand changes underway to maintain their credibility.