Tenreyro warns AI may not curb inflation

Silvana Tenreyro, the International Monetary Fund's new chief economist, co-authored research published by United Kingdom — Bank of England staff on August 20, 2026, warning that even if artificial intelligence boosts productivity, it may not lower inflation. The research, published on the BoE's Bank Underground blog, argues that the inflation impact of productivity gains is ambiguous. If investment demand and household spending move ahead of realized productivity gains, as is happening with AI infrastructure investment, this can lead to supply crunches, pushing up inflation and requiring higher interest rates. The analysis also notes that productivity gains in services are more likely to lower domestic inflation, while gains in exports tend to push up domestic wages and boost demand for supply-constrained services, raising inflation. Prices of computer memory and graphics chips have surged over the past year due to data center demand, raising prices of consumer electronics. United States — Federal Reserve Chair Kevin Warsh has expressed hope that AI will allow the U.S. economy to grow faster without causing higher inflation, a view the research challenges.