RBA's Hunter Warns AI Boom Spurs Inflation and Threatens Asset Repricing

Reserve Bank of Australia Assistant Governor Sarah Hunter warned that the ongoing artificial intelligence boom is fueling short-term inflationary pressure and poses financial stability risks. Speaking at a UBS conference in Sydney, Hunter noted that aggregate productivity gains from AI remain limited while investments in data centres and infrastructure act as positive demand shocks against constrained supply. She cautioned that asset prices could face sharp repricing if capital expenditure returns disappoint elevated expectations. These dynamics reinforce the RBA's tightening bias, which has seen the benchmark cash rate raised five times this year to an 18-year high of 4.85%.