IMF research: AI investment can raise inflation before productivity gains
This digest was compiled by AI from multiple sources — links to the originals are below.
IMF chief economist Silvana Tenreyro and Bank of England co-authors argue in a Bank Underground paper that AI investment can lift inflation before productivity gains materialize. They point to data centre demand that has already raised computer memory and graphics chip prices, feeding into smartphones and laptops. The findings diverge from the usual view that productivity growth eases price pressures.
Key Facts
- The paper was co-authored by IMF chief economist Silvana Tenreyro, Bank of England economist Jenny Chan and researcher Ludovica Ambrosino.
- The Bank Underground paper argues AI investment can raise inflation before productivity gains materialize.
- Data centre demand cited in the Bank Underground paper has already pushed up computer memory and graphics chip prices.
- Silvana Tenreyro served on the Bank of England's Monetary Policy Committee from 2017 to 2023; the paper's conclusions do not represent the Bank's official position.
Research Publication
Baq.kz reported on the paper on 21 August 2026. The paper was published on the Bank of England's Bank Underground blog. Its findings do not represent the Bank of England's official position. The paper argues AI investment and consumer spending can rise before productivity gains materialize. If investment demand and spending surge before AI-driven efficiency appears, supply shortages can strengthen inflationary pressure.
Inflation Channels
The paper distinguishes two channels through which productivity affects inflation: services-sector gains can lower domestic inflation, while export-sector gains can raise wages and domestic demand. Data centre demand has already pushed up prices for computer memory and graphics chips, the paper says. That feeds into prices for smartphones, laptops and other electronics. If investment and spending outpace the emergence of AI benefits, central banks would need to raise interest rates.
The Authors
Silvana Tenreyro is the IMF's new chief economist. She co-authored the study with Bank of England economist Jenny Chan and researcher Ludovica Ambrosino. Tenreyro served on the Bank of England's Monetary Policy Committee from 2017 to 2023. She contributed to the paper as a professor at the London School of Economics.
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IMF research: AI investment can raise inflation before productivity gains
