Central Banks Must Track AI Income Distribution: ECB's Panetta

European Central Bank Governing Council member Fabio Panetta called on central banks to monitor how artificial intelligence (AI) distributes income, citing its potential impact on inflation and aggregate demand.

Panetta, who is also governor of the Bank of Italy, made the comments at an event hosted by the National Bank of Ukraine.

AI is set to transform various markets, including labour and financial systems, Panetta noted. However, he warned that if AI mainly creates new tasks without significantly increasing productivity, demand could increase before its full benefits materialise, prolonging inflationary pressures.

Panetta emphasized the importance of understanding the changes underway in order to maintain central bank credibility.