Bank for International Settlements assesses how debt-financed AI investment boom complicates monetary policy calibration

The Bank for International Settlements published an assessment of the artificial intelligence investment boom’s near-term macroeconomic, monetary policy and financial stability implications. AI is already strengthening investment, trade and asset prices, while its potentially large productivity benefits remain uncertain and uneven. By affecting demand and supply simultaneously, the boom is obscuring cyclical signals and complicating central banks’ estimates of underlying economic conditions, inflation pressures and key benchmarks such as natural rates of interest and unemployment. AI-related spending has reached around 1% of gross domestic product in the most exposed economies, and industry projections put global investment at USD 3 trillion to USD 4 trillion by 2030, up from USD 500 billion. Financing is increasingly shifting toward private credit and bond markets. The effects vary substantially across countries, with AI-goods exporters receiving terms-of-trade gains while infrastructure importers face higher costs, and AI-linked equity gains supporting consumption through wealth effects. Early evidence also points to weaker hiring in highly exposed sectors, although broad labor displacement remains limited. The assessment warns that overestimating supply gains could leave policy too accommodative, while underestimating them could produce unnecessarily restrictive conditions. A gradual, data-dependent approach may reduce policy errors. Financial stability risks include overinvestment, resource misallocation, weaker credit quality and an asset-price correction that could tighten financial conditions and depress investment and demand.