RBA Governor Warns AI Boom May Fuel Inflation Without Productivity Gains

Reserve Bank of Australia (RBA) Governor Michele Bullock has expressed concerns that the current AI boom may be fueling inflation without delivering productivity gains. Speaking at a Committee for Economic Development of Australia forum in Sydney, Bullock described AI as the global economy's 'great white hope,' but noted that there is currently no verifiable evidence that it has improved operational efficiency across Australian businesses.

Bullock pointed out that heavy corporate expenditure on computational infrastructure, power systems, and high-density data centres is stimulating aggregate demand at a time when Australia's economy is already operating above capacity. This surge in front-end demand arrives before any productivity improvements materialize on the supply side to expand productive capacity.

Central banks are closely monitoring the risk of a disorderly correction across financial markets, with Bullock warning that an abrupt collapse in technology equity values would create severe balance sheet shocks across institutional portfolios and dampen broader economic activity. The governor emphasized her open view on asset pricing but noted that there is limited empirical validation of corporate earnings durability.