RBA's Hunter Says AI's Productivity Boom Is Still Missing, Warns of Market Risk

Reserve Bank of Australia Assistant Governor Sarah Hunter threw cold water on the AI hype on Monday, telling a UBS conference in Sydney there's little proof the technology has meaningfully lifted productivity or wiped out jobs. She said the impact on inflation will likely shift over time, starting with a demand bump that pushes prices higher while the economy is still supply constrained.

The near-term pressure is real. Australia's data centre investment boom has added to demand in the economy, and Hunter pointed to it as one reason the RBA has hiked rates five times this year. Rates now sit at 4.85%, an 18-year high, as the bank battles inflation.

The relief, if it comes, will take time. Hunter said supply should catch up with demand as data centre capacity and related sectors expand, easing today's bottlenecks. And if AI does eventually deliver broader productivity gains, economies will produce more with the same inputs, letting the initial inflationary push fade.

On jobs, the picture is murky rather than dramatic. Hunter said there are only tentative signs of adjustment: weaker job ads and employment outcomes in occupations more exposed to AI, and stronger growth where the tech has had less impact, particularly for younger workers.

Then there's the wildcard. Hunter warned AI could crank up risks to financial stability, with asset prices vulnerable to sharp repricing or even disorderly moves if AI investment returns fall short of expectations. Translation: the market's AI bet could get ugly if the payoff doesn't show up.