AI surge prompts central banks to raise rates
The article addresses the impact of the artificial intelligence revolution on economic policies, highlighting how this surge is prompting central banks to prepare for rising interest rates amid increasing demand for financing and substantial investments in AI-related projects. It is expected that this will lead to a rise in the neutral interest rate, making borrowing costs higher and exerting greater inflationary pressures, especially as governments borrow more and the benefits of cheap money diminish. Additionally, predictions suggest that these developments could cause financial disruptions and more volatile markets.
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