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RBA’s Hunter says AI has yet to deliver productivity boost, trigger job losses
A senior Reserve Bank of Australia official says there is still little evidence that artificial intelligence has significantly lifted productivity or caused widespread job losses. Sarah Hunter said AI could initially add to inflation by boosting investment and demand, while its longer-term effect may ease price pressures if it enables economies to produce more with the same resources.
Hunter also warned that AI investment could create risks for financial stability if expected returns fail to materialise, potentially prompting sharp falls in asset prices. Data centre investment is adding to Australian demand pressures; the central bank has raised interest rates five times this year to 4.85 per cent, an 18-year high. She noted early signs of labour market adjustment, including weaker job advertising and employment outcomes in AI-exposed occupations, particularly for younger workers.
In short
- AI has yet to show a major productivity or employment impact.
- Data centre investment is adding to demand and inflation pressures.
- Hunter warns disappointing AI returns could unsettle financial markets.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
The limited evidence so far suggests AI has not yet transformed productivity or caused widespread job losses, so it may be premature to treat it as a major economic shock. Investment in data centres and related infrastructure can support future productive capacity, while early labour-market changes may reflect gradual adjustment rather than lasting displacement.
The case against
AI could already be imposing costs even if economy-wide effects are not yet clear: weaker job outcomes in exposed occupations may be significant for younger workers, and the investment boom may add to demand and inflation before productivity gains arrive. If expected returns disappoint, heavy investment could also expose financial markets to sharp losses, making close attention to these risks prudent.
Explained simply
The Reserve Bank of Australia (RBA) sets interest rates to help keep prices stable and support employment. Its officials assess how changes in technology may affect the economy, including productivity: how much businesses produce from the workers, equipment and materials they use.
Companies are investing in artificial intelligence and the data centres needed to run it. Such investment can increase demand and add to price pressures in the near term; if AI later helps businesses produce more with the same resources, it could ease those pressures.
The effects on workers and financial markets are also uncertain. Some early employment changes have appeared in roles more exposed to AI, while investors could face losses if returns on AI projects fall short of expectations.