By Ankika Biswas <\/p>\n
Oct 8 (Reuters) – Australia’s AI investment boom is likely to boost inflation in the near term as productivity benefits take \u200clonger to emerge, leaving the central bank with limited scope to \u200coverlook price pressures, Jonathan Kearns, a former Reserve Bank of Australia official, said on Thursday. <\/p>\n
“What makes this \u200ba 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 Reuters Global Markets Forum. <\/p>\n
Use of imported equipment, which Kearns \u200cestimated accounts for around three-quarters \u2060of data centre spending in Australia, will cushion some of the inflationary effect, but domestic spending will still add to \u2060aggregate demand, he said. <\/p>\n
Australia’s inflation accelerated in August as fuel costs surged anew and price pressures remained broad-based. In September, the RBA raised its cash rate for the \u200bfourth time \u200bin 2026 to a 15-year high \u200bof 4.6%, with Governor Michele Bullock \u200csaying the AI boom was boosting inflation. <\/p>\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
Now chief economist at Challenger, Kearns expects one more hike from the Australian central bank this year. <\/p>\n
He expects \u200cAI investment to stay relatively resistant to \u200bhigher interest rates as businesses press ahead with \u200btrying to capture lucrative opportunities. <\/p>\n
Consequently, \u200bthe burden of tighter monetary policy is likely to fall \u200cmore heavily on households, the exchange \u200brate, and to some \u200bextent non-AI business investment, Kearns said. <\/p>\n
He said broader gains from AI use would become visible in the labour market once businesses moved beyond \u200busing it for routine \u200ctasks, and fundamentally redesigned workflows.(Join GMF, a chat room hosted on LSEG \u200bMessenger, for live interviews: https:\/\/lseg.group\/3KFHrhe) <\/p>\n
(Reporting by Ankika Biswas in Bengaluru; \u200bEditing by Divya Chowdhury and Kevin Liffey) <\/p>\n","protected":false},"excerpt":{"rendered":"By Ankika Biswas Oct 8 (Reuters) – Australia’s AI investment boom is likely to boost inflation in the…\n","protected":false},"author":2,"featured_media":624322,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[2169,138,553,219,246,5932,329,37332,5933,5483,16400,7454,111,139,69,244,8499,13081,294,781,5934,5935,643,37333,7496,37334],"class_list":["post-624321","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-401k","tag-business","tag-business-news","tag-economy","tag-finance","tag-financial-information","tag-investing","tag-investment-tools","tag-investor","tag-market-news","tag-mortgage","tag-mutual-funds","tag-new-zealand","tag-newzealand","tag-nz","tag-personal-finance","tag-quote","tag-real-estate","tag-retirement","tag-stock","tag-stock-research","tag-stock-valuation","tag-stocks","tag-suze-orman","tag-tax","tag-track-portfolio"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/624321","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=624321"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/624321\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/624322"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=624321"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=624321"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=624321"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}