Oct 8 (Reuters) – Australia’s AI investment boom is likely to boost inflation in the near term as productivity benefits take longer to emerge, leaving the central bank with limited scope to overlook price pressures, Jonathan\u00a0Kearns, a former Reserve Bank of Australia official, said on Thursday.<\/p>\n
\n “What makes this a little bit more difficult is, because it’s a new technology, there’s more uncertainty about the timeline of investment (and) how much of this investment actually gets put in place,” he told the\u00a0Reuters Global Markets Forum.<\/p>\n
\n Use of imported equipment, which Kearns estimated accounts for around three-quarters of data centre spending in Australia, will cushion some of the inflationary effect, but domestic spending will still add to aggregate demand, he said.<\/p>\n
\n Australia’s inflation accelerated in August as fuel costs surged anew and price pressures remained broad-based. In September, the RBA\u00a0raised its cash rate for the fourth time in 2026 to a 15-year high of 4.6%, with Governor Michele Bullock saying the AI boom was boosting inflation.<\/p>\n
\n “There’s absolutely no chance (the RBA) can look through the inflationary impetus because we’ve had four or five years of high inflation and inflation being above target,” Kearns said.<\/p>\n
\n Now chief economist at Challenger, Kearns expects one more hike from the Australian central bank this year.<\/p>\n
\n He expects AI investment to stay relatively resistant to higher interest rates as businesses press ahead with trying to capture lucrative opportunities.<\/p>\n
\n Consequently, the burden of tighter monetary policy is likely to fall more heavily on households, the exchange rate, and to some extent non-AI business investment, Kearns said.<\/p>\n
\n He said broader gains from AI use would become visible in the labour market once businesses moved beyond using it for routine tasks, and fundamentally redesigned workflows.(Join GMF, a chat room hosted on LSEG Messenger, for live interviews: https:\/\/lseg.group\/3KFHrhe)<\/p>\n
(Reporting by Ankika Biswas in Bengaluru; Editing by Divya Chowdhury and Kevin Liffey)<\/p>\n
\n By Ankika Biswas<\/p>\n","protected":false},"excerpt":{"rendered":"Oct 8 (Reuters) – Australia’s AI investment boom is likely to boost inflation in the near term as…\n","protected":false},"author":2,"featured_media":925394,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46,100],"class_list":["post-925393","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-ca","tag-canada","tag-economy","tag-markets"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/925393","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=925393"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/925393\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/925394"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=925393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=925393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=925393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}