RBA’s Hunter sees limited AI productivity gains so far

A Reserve Bank of Australia official cautioned on Monday that artificial intelligence has not yet demonstrated clear productivity gains or caused significant job losses, while warning that it could pose financial stability risks. Assistant Governor Sarah Hunter spoke at a UBS conference in Sydney, noting that AI's impact on inflation will likely evolve over time.

She explained that the technology is currently driving up demand and contributing to price pressures while the economy grapples with supply constraints. Evidence remains limited that AI has materially boosted productivity or substantially influenced employment levels, according to Hunter. However, there are preliminary signs of adjustment, such as reduced job postings and employment outcomes in AI-exposed occupations, alongside stronger growth in sectors less impacted by the technology, particularly for younger workers.

The official cautioned that AI could heighten financial stability risks, as asset prices may experience sharp repricing if returns from AI investments fall short of expectations. Hunter stated that supply will eventually align with demand as data center capacity and related sectors expand, alleviating current bottlenecks. If AI ultimately delivers broader productivity gains, economies will be better positioned to produce more with the same inputs, and the initial inflationary pressures from AI investment are likely to fade away.

The article was AI-generated with editorial review and published as part of a broader discussion on economic conditions, including the Reserve Bank of Australia's recent interest rate hikes aimed at curbing inflation.