Fabio Panetta, a member of the European Central Bank's Executive Board and Governor of the Bank of Italy, stated that central banks must determine how the gains from artificial intelligence are distributed. According to Panetta, the allocation of these economic benefits will directly influence aggregate demand and inflation trends.
Panetta noted that AI is set to reshape productivity, economic growth, labor markets, financial systems, and payment infrastructures. He emphasized that if AI primarily creates new jobs and increases expected labor income, aggregate demand could rise before productivity gains are fully realized, potentially extending inflationary pressures.
Conversely, if automation replaces human labor, the resulting decline in consumption could cause the disinflationary effects of AI to emerge sooner. Panetta made these remarks at an event hosted by the National Bank of Ukraine, highlighting that understanding these shifts is essential for maintaining the credibility of central banks.
