In a recent speech, Bank of Canada Governor Tiff Macklem explored how artificial intelligence (AI) could influence inflation, productivity, and labor dynamics. He noted that while AI investments and rising demand may stoke inflationary pressures in the short term—through increased consumption, surging electricity needs, and price volatility—the long-term potential is brighter. Macklem highlighted that productivity gains from AI adoption could lead to higher wages and economic growth without adding to inflation. However, he also warned about potential volatility in pricing behaviours and labour disruptions, given the rapid pace of AI adoption.
I found this analysis particularly interesting because it underscores the dual nature of AI as both a short-term disruptor and a long-term growth driver.