Is AI Gradually Impacting the Economy? BofA: Not a Major Factor Influencing Monetary Policy

AI Inflation Effects Are Short-Term Difficult to Shake Up Monetary Policy

Cailian Press, March 23 (Editor: Liu Rui) Recently, Bank of America released a report stating that although investments in artificial intelligence are rapidly increasing, they are unlikely to have a substantial impact on central bank decisions in the short term because their macroeconomic influence remains limited and gradual.

AI’s Inflation Effect Still Relatively Weak

Bank of America states that the current inflation effect of artificial intelligence is still quite weak. The main sources of AI-related inflation are twofold: one is energy-intensive data centers driving up energy costs, and the other is the positive wealth effect from the stock market surge fueled by the AI boom.

However, these pressures are not enough to force central banks like the Federal Reserve to change their policy stance.

BOA believes that although AI investments are driving economic growth, contributing an estimated 0.4 percentage points to U.S. GDP growth this year, their impact remains relatively small compared to broader macro drivers such as the labor market, fiscal policy, and energy prices.

One reason AI has not become central to monetary policy is its still relatively low adoption and penetration. Despite the hot AI trend, its application across various economic sectors remains limited, meaning the productivity gains it could bring have not yet manifested on a large scale.

Therefore, it is unlikely that central banks will react strongly to the AI boom unless its influence on wages, output, and price dynamics becomes more apparent in the future.

Bank of America also points out that the current boom in AI is largely driven by capital expenditure cycles, especially the construction of data centers and infrastructure by large tech companies. While this helps promote economic growth, it does not immediately translate into sustained consumer demand inflation, which would necessitate tightening policies.

Long-Term Impact Could Be More Complex

However, in the longer term, AI is likely to complicate monetary policy.

BOA expects that AI will improve productivity and may increase inflation, forcing policymakers to weigh the trade-offs between pursuing stronger growth and managing evolving inflation dynamics.

Currently, BOA’s conclusion is clear: AI has significant economic importance, but it is not yet a decisive factor for near-term interest rate decisions. Central banks around the world will continue to focus on more direct factors that directly impact inflation and economic growth—such as the recent surge in international oil prices triggered by the Middle East conflict.

(Cailian Press, Liu Rui)