SNB's Tschudin says AI could push up inflation short term
This digest was compiled by AI from multiple sources — links to the originals are below.
Swiss National Bank governing board member Petra Tschudin said artificial intelligence can push inflation higher in the short term, citing chip shortages and redirected investment flows. She told Finanz und Wirtschaft the overall effect of AI on prices remains unclear, with longer-term productivity gains potentially lowering costs. The SNB's conditional forecast sees inflation within its 0-2% target range through Q1 2029, but Tschudin stressed it does not imply rates will stay at 0%.
Key Facts
- SNB governing board member Petra Tschudin said AI can push inflation higher in the short term through chip shortages and redirected investment flows.
- The SNB's conditional forecast sees inflation within its 0-2% target range through the first quarter of 2029.
- Tschudin said the forecast does not imply the SNB will keep its policy rate at 0% for three years.
- IMF chief economist Silvana Tenreyro warned on Thursday that AI-driven productivity gains may not lower inflation.
AI's Inflationary Channels
Tschudin told Finanz und Wirtschaft that investment flows are being partly redirected, which can cause adjustments and difficulties for the rest of the economy. Shortages can occur, for example with chips, causing prices to rise, she said. In the short or medium term, upward inflationary pressure can therefore arise, Tschudin added.
Long-Term Deflationary Risks
In the longer term, AI could lower prices by increasing productivity and making goods cheaper, Tschudin said. Because inflation is calculated on an annual basis, a deflationary effect would require the price decline to repeat itself regularly, she explained. Productivity gains are not a new phenomenon and do not by themselves lead an economy into structural deflation, Tschudin said.
Policy Rate Outlook
The SNB's latest forecast does not see inflation above or below its target range of 0% to 2% through the first quarter of 2029. Tschudin said the forecast should not be seen as a signal that the central bank will not change its policy interest rate, which currently stands at 0%. The forecast is based on how the central bank sees inflation if interest rates remain unchanged, she said. If there is new relevant information about inflation, the SNB will adjust monetary policy, Tschudin said. The conditional inflation forecast should not be understood to mean that interest rates will remain at their current level for three years, she added.
1 source
SNB's Tschudin says AI could push up inflation short term
