IMF’s Georgieva says any slowdown in AI-driven growth would be factor for central banks

International Monetary Fund Managing Director Kristalina Georgieva warned on Friday that any slowdown in AI-driven growth would be a factor for central banks to consider when assessing steps in their fight against inflation. Georgieva noted concerns about dependence on the AI investment boom and high valuations were impacting markets worldwide, causing volatility that would complicate central banks' task at a time when risks to price stability had been growing.

A sharp fall in technology stocks on Thursday sparked fears that Democrats' victory in the US midterm elections would lead to increased regulatory scrutiny of AI and slow down data center development, prompting investors to seek safety in bonds. While AI investment was bolstering growth in some countries, offsetting a negative oil supply shock from the Middle East war, it was also contributing to inflationary pressures and financial stability concerns.

The IMF had previously cautioned that a sudden end to AI investment could result in a significant drop in asset prices and a global GDP reduction by 2028, including a 1.8% decline in US output. Georgieva did not reiterate the downside forecast on Friday but acknowledged recent market fluctuations. A slowdown in AI-driven growth would need to be taken into account by central banks as they determine the necessary measures to combat persistent inflation, Georgieva stated.