$42b fund manager Cathie Wood sees interest rates topping 7pc on AI boom
The artificial intelligence boom could push the global economy into "good deflation" as economic growth surges, but that could result in interest rates exceeding 7 per cent, according to a major technology investor.
Investment manager Cathie Wood foresees interest rates surpassing 7% as the artificial intelligence revolution accelerates, potentially leading to short-term rates of around 6.5 to 7.5% and nominal rates of 6 to 7.5%. Despite calls for regulation, Wood believes such measures will not be enacted and predicts US President Donald Trump will veto any bills passed by Congress.
Wood argues that artificial intelligence and related technologies are inherently deflationary, increasing productivity and reducing production costs. She states that the current AI expansion will bring about an economic boom with deflation, unlike during economic crises where demand collapses. Wood anticipates nominal GDP growth moving into the 7 to 8% range, with short-term rates approaching nominal GDP growth.
She notes that major US AI companies are already generating revenues exceeding ARK's expectations, with Anthropic's annualized revenue run rate reaching $65 billion in July 2023. Wood emphasizes the AI boom's differentiation from previous booms, such as the railroad and internet eras, as it has a more concrete market and revenue generation.
However, she acknowledges the potential threat of regulation, asserting that US President Trump will likely veto any regulatory attempts during his tenure.
Written by urgent.news from ABC News AU's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
