AI in action · Regulation
RBA's Hunter: AI Lifts Inflation Now, Productivity Later
RBA Assistant Governor Sarah Hunter said on November 9 that AI investment adds to inflation now, while its productivity gains are not yet visible.
Central banks are starting to treat artificial intelligence as a macroeconomic shock in its own right. On Monday, November 9, Sarah Hunter, Assistant Governor (Economic) of the Reserve Bank of Australia, gave a speech at the UBS Australasia Conference in Sydney titled "What Happens to the Economy as 'Intelligence' Gets Cheaper?". It came from a central bank that, as Reuters noted, has raised its cash rate five times this year, to an 18-year high of 4.85%.
On the demand side the effect is already measurable. The RBA's estimates of realised data-centre investment in Australia have "increased 10-fold (from a very low base) over the past three years", though much of the spending goes on imported equipment, which limits what it adds to GDP. Hunter said this demand "will put some upward pressure on inflation" in the near term, with price rises so far concentrated in a narrow set of consumer electronics that carry small weights in the CPI basket. Over the long run she expects AI's effect on inflation to be broadly neutral.
The supply side, where the productivity gains would show up, is still mostly a forecast. Hunter found "limited evidence that AI has materially lifted aggregate productivity", and cited estimates of AI's contribution to annual productivity growth over the next decade that range "from over 2 per cent per annum to just 0.1 per cent". In the RBA's liaison survey, the share of firms reporting no AI adoption fell from about a third in 2025 to almost zero in 2026, yet about 35% of firms report no productivity gain and about three-quarters no change in headcount.
The part aimed at markets concerned valuations. Share prices of US AI-related companies have "roughly quadrupled since the end of 2022", and RBA staff estimate that about 5% of Australian households' financial wealth sits in AI-related equities, directly or through superannuation. With global risk premia low by historical standards, Hunter said, disappointing returns on AI investment could bring "sharp repricing and possibly disorderly adjustments" in equities and corporate debt.
She did not forecast a correction; the risk was framed as conditional on returns falling short. Her closing point was about patience: "History suggests that the largest gains from transformative technologies often take longer to emerge than initially expected." For a central bank fighting inflation, that sequence, costs first and gains later, argues for caution on rates, and the Fed's Philip Jefferson addresses the same productivity question on Friday.
Sources: Reserve Bank of Australia — Sarah Hunter, What Happens to the Economy as 'Intelligence' Gets Cheaper? (Nov 9, 2026); Reuters via The Star — RBA's Hunter says AI has yet to deliver productivity boost, trigger job losses (Nov 9, 2026)