🌋 AI Poses Risk to Economy, Warns Bank of Canada
posted 21 Sept 2024
Tiff Macklem, the Governor of the Bank of Canada, cautioned that artificial intelligence could temporarily push inflation higher and undermine financial stability. He pointed out that companies using AI tend to adjust prices more frequently than others.
Central banks need to be closely attuned to how AI is affecting inflation, both indirectly through overall demand and supply and directly through price-setting behavior,Macklem noted.
He also called for cautious AI investments, acknowledging its benefits—such as process optimization and improved service—but warning of risks like hallucinations (AI generating false data) and potential discrimination against users.
Macklem expressed concern that AI could eliminate more jobs than it creates and warned that excessive automation could lead to negative incidents with far-reaching consequences across industries. The Bank of Canada is now actively examining AI's impact on the economy.
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