RBA's Sarah Hunter says AI's near-term effect is more demand and inflation pressure, with productivity gains still to show

AI's first effect on the economy is likely to be more demand and upward pressure on inflation while supply is constrained, with productivity gains to follow over time, Reserve Bank of Australia Assistant Governor (Economic) Sarah Hunter said in a speech at the UBS Australasia Conference in Sydney on November 9.

Investment in data centres and utility networks is already adding directly to demand, including in Australia's major trading partners. Over time, Hunter said, supply should catch up as data-centre capacity expands, and the initial inflationary pressure from AI investment is likely to dissipate. So far there is limited evidence that AI has materially lifted aggregate productivity, and estimates of its effect on annual productivity growth over the next decade range from just 0.1% to over 2%.

Adoption is spreading fast among firms the RBA talks to: the share reporting no AI use fell from around a third in 2025 to almost zero in 2026. There is little evidence yet of large effects on aggregate employment, but Hunter said aggregate indicators may mask displacement for individual workers. She also warned that AI could worsen cyber threats and that financial market exposure to the AI investment boom is rising while risk premia are low.