RBA’s Hunter says AI has yet to deliver productivity boost, trigger job losses

Reserve Bank of Australia Assistant Governor Sarah Hunter highlighted the limited evidence of artificial intelligence's positive impact on productivity and job displacement during a UBS conference in Sydney. Hunter noted that AI's effect on inflation would likely fluctuate over time, initially driving demand and exacerbating price pressures while the economy faced supply constraints.

As data centre capacity and related industries expanded, supply would eventually meet demand, alleviating current bottlenecks. If AI ultimately generates broader productivity gains, economies would theoretically produce more with the same inputs, potentially diminishing the initial inflationary pressures from AI investment. The Reserve Bank of Australia has raised interest rates five times this year, reaching an 18-year high of 4.85%, in response to increased demand pressures stemming from a surge in domestic data centre investment.

Hunter acknowledged that there were preliminary indications of adjustment, such as fewer job advertisements and employment outcomes in AI-exposed occupations, alongside stronger growth in sectors less impacted by the technology, particularly among younger workers. She also cautioned about potential risks to financial stability, with asset prices vulnerable to sharp repricing or disorderly adjustments if AI investment returns fail to meet expectations.