AI-Driven Inflation Fears Grow as SNB Weighs Monetary Policy

Swiss National Bank governing board member Petra Tschudin has expressed concerns that artificial intelligence (AI) could lead to higher inflation in the short term. In an interview published on Friday, she noted that AI can cause price increases due to investment flows being redirected and shortages occurring in certain sectors.

Tschudin cited the example of chip shortages leading to rising prices, which can contribute to upward inflationary pressure in both the short and medium term. However, she also acknowledged that AI could potentially lower prices by increasing productivity and making goods cheaper over time.

Yet, Tschudin emphasized that for deflationary effects to be seen, this price decline would need to repeat itself regularly. She also pointed out that structural deflation is unlikely to occur solely due to productivity gains.