Artificial intelligence could add to inflationary pressure in the short term as surging investment in the technology strains supplies of key components, according to Swiss National Bank governing board member Petra Tschudin. As reported by Finanz und Wirtschaft, the SNB is closely assessing how AI could affect prices, with the technology capable of pushing inflation in either direction. A major concern is the way AI is redirecting investment, with heavy spending on AI infrastructure potentially drawing capital and resources away from other parts of the economy, creating adjustment pressures.
Chip shortages represent another potential source of inflation, with strong demand for semiconductors linked to AI creating upward pressure on prices over the short and medium term. According to the SNB assessment, this supply tightening could push prices higher and contribute to inflationary pressures in the near term. The impact could change over time, with AI potentially reducing prices by raising productivity and making goods cheaper, though the deflationary effect remains uncertain.
Tschudin noted that AI may eventually reduce prices by raising productivity and making goods cheaper, though she questioned whether those productivity gains would be large and persistent enough to produce a broader deflationary effect. As reported by Reuters, because inflation measures annual changes in prices, a sustained decline would be needed to create a lasting deflationary impact. She emphasized that productivity gains are not new and do not automatically result in structural deflation.
For Switzerland, the SNB currently expects inflation to remain within its 0% to 2% price stability range through the first quarter of 2029, with the central bank's policy rate currently standing at 0%. According to the SNB assessment, the inflation outlook should not be interpreted as a commitment to keep interest rates at zero for the next three years, as the forecast assumes the policy rate remains unchanged. The central bank would adjust monetary policy if new information materially changes its assessment of inflation.
