Central bankers eye higher rates as AI boom fuels scramble for cash – CNBC TV18

The artificial intelligence boom is setting off a global race for money, forcing central bankers to contemplate a future in which interest rates stay higher and governments need to tighten their belts after an era of largesse.

From silicon chips and data centres to power grids and telecoms networks, governments and companies are pouring money into projects tied directly or indirectly to AI, adding fuel to the global economy and pushing up borrowing costs.

Central bankers from the world’s largest economies gathering in Bangkok said the boom was also creating fresh inflation pressures and financial risks, because the investment is arriving long before the productivity gains AI promises.

”If you’re a central banker…you’ve got to recognise this as a shock,” Federal Reserve Chair Kevin Warsh said at the annual meetings of the International Monetary Fund and World Bank in Bangkok. ”It’s obviously hitting the demand side of the economy before it’s going to hit the supply side.”

Warsh, who said the US was benefiting from a broadening ”surge of investment”, warned the transition could be ”very bumpy” as investors, companies and policymakers grappled with a technology whose ultimate winners remain unclear.

Several of his colleagues from the G20 group of…

Original source: https://www.cnbctv18.com/technology/