BoC's Macklem: AI could destroy more jobs than it creates

Bank of Canada Governor Tiff Macklem said on Friday that the adoption of artificial intelligence (AI) could add to inflationary pressures in the near term, per Reuters.

Key takeaways

"AI, combined with a more shock-prone world, means inflation could be more volatile than it was in the 25 years before the pandemic."

"Central banks need to be closely attuned to how AI is affecting inflation, both indirectly and directly."

"AI is expected to boost productivity; when labor productivity is rising, the economy can grow more quickly without causing inflation."

"AI could destroy more jobs than it creates, and people may struggle to find new opportunities; this is a concern for us all."

"We don’t have much evidence that labor is being displaced by AI at rates that would lead to declines in total employment."

"AI adoption could also lead to financial stability issues; operational risks could become concentrated in a few third-party service providers."

"There is huge potential for central banks to use AI to understand how consumers and businesses are behaving."

Market reaction

These comments failed to trigger a noticeable market reaction. At the time of press, USD/CAD was virtually unchanged on the day at 1.3565.