AI Drives Short-Term Inflation Fears in Switzerland

Swiss National Bank governing board member Petra Tschudin has expressed concerns that artificial intelligence (AI) may drive inflation higher in the short term, but its overall impact on prices remains uncertain.

Tschudin told Finanz und Wirtschaft that AI could influence inflation in both directions. On one hand, it can cause shortages and price increases due to investment flows being redirected and adjustments in the economy. For example, chip shortages can lead to rising prices.

However, over a longer period, AI could boost productivity and lower the cost of goods, potentially reducing prices. But Tschudin noted that deflationary effects would require regular price declines, which is uncertain.

Tschudin's comments echo those of International Monetary Fund chief economist Silvana Tenreyro, who warned in research published by Bank of England staff that AI may not lower inflation even if it increases productivity.