IMF ECONOMIST WARNS AI MAY NOT LOWER INFLATION

Developing story: AI investment data, chip prices, central-bank commentary and inflation expectations may change as more evidence emerges.

Artificial intelligence may not deliver the disinflationary boost many policymakers and investors expect, according to a new analysis co-authored by International Monetary Fund chief economist Silvana Tenreyro and cited by Reuters on Thursday. The warning challenges the argument that AI productivity gains will allow economies to grow faster without higher inflation.

Tenreyro, Bank of England economist Jenny Chan and researcher Ludovica Ambrosino wrote that the inflation impact of expected productivity gains is ambiguous. If businesses invest and households spend in anticipation of AI benefits before those gains are realized, demand can rise faster than supply, creating bottlenecks and price pressure.

The analysis matters because AI optimism has become central to market pricing and economic forecasting. Federal Reserve Chair Kevin Warsh has expressed hope that AI will let the U.S. economy expand more quickly without igniting inflation. The new research cautions that the timing of gains may be as important as the gains themselves.

Data centers are a practical example. Massive investment in chips, electricity, land, cooling and construction can increase demand for scarce inputs before AI systems produce measurable economywide productivity improvements. Reuters reported that prices of computer memory and graphics chips have surged over the past year because of data-center demand, pushing up prices for phones, laptops and other electronics.

The research also distinguishes between types of productivity. Gains in domestically produced services are more likely to reduce domestic inflation, while gains in export sectors can raise wages and demand for supply-constrained services, potentially increasing inflation. That nuance matters for countries whose AI benefits may be concentrated in a few export-heavy technology sectors.

The paper was published on the Bank of England’s Bank Underground blog, a forum for research and commentary that does not necessarily reflect the central bank’s official view. Tenreyro contributed in her role as a London School of Economics professor, not as an IMF policy announcement.

The warning also intersects with financial markets. Heavy AI infrastructure spending has supported technology stocks but raised concerns about bond yields, data-center debt and power demand. If AI investment pushes inflation and rates higher before productivity arrives, the sector could face a less favorable financing environment.

What is confirmed is that Tenreyro and co-authors warned that AI productivity gains may not automatically reduce inflation and could raise price pressures first. What remains unresolved is whether AI’s economywide productivity effects arrive quickly enough to offset infrastructure bottlenecks, component shortages and higher demand for energy and services.

Fact-check date: August 20, 2026. Article type: Analysis. Sources: Reuters; Bank Underground; International Monetary Fund; Bank of England. Developing note: AI investment data, chip prices, central-bank commentary and inflation expectations may change as more evidence emerges.