ECB's Panetta: How AI Gains Are Shared Will Shape Inflation

Fabio Panetta, a member of the European Central Bank's Executive Board, said central banks need to clarify who benefits from artificial intelligence, as how those gains are shared will affect overall demand and inflation.

Panetta said AI will reshape productivity, economic growth, labor markets, financial markets and payment systems. He also serves as governor of the Bank of Italy, and made the remarks at an event hosted by the National Bank of Ukraine.

He noted that if AI mainly creates new jobs and raises expected labor income, overall demand could rise before productivity gains fully materialize, extending inflation pressure. If automation replaces human labor on a large scale, weaker consumption could bring the inflation-dampening effect earlier.

Panetta stressed that credibility is a core asset for every central bank, and central banks cannot stay on the sidelines. Understanding ongoing changes is increasingly key to maintaining that credibility.