Published on 5/30/2026
Artificial intelligence is becoming one of the most prominent issues in global central bank discussions, with questions mounting regarding its potential impact on the labor market, productivity, inflation, and monetary policy in the coming years.
According to a Bloomberg report, artificial intelligence dominated a large part of the discussions at the Reykjavik Economic Conference in Iceland this week, although the conference agenda did not directly include technology, as central bank governors repeatedly returned to discussing its potential economic repercussions.
New York Federal Reserve Bank President John Williams joked to the audience that demand for macroeconomists “will remain strong,” referring to the growing controversy over the ability of artificial intelligence to replace some human jobs.
These discussions came at a time when central banks are facing simultaneous challenges, including the global energy shock, monetary policy shifts, rising bond yields to levels not seen in markets for decades, in addition to the investment boom linked to artificial intelligence.
Optimism about productivity
Williams presented one of the most optimistic visions during the conference, considering that economic history proves the possibility of achieving higher levels of productivity and improved standards of living without causing long-term structural unemployment.
He said that previous experiences have shown that economies are able to absorb major technological transformations without permanent job losses, adding that he does not believe that artificial intelligence will lead to widespread structural unemployment in the long term.
This vision is particularly important in the United States, which leads global investments in artificial intelligence technologies, as Federal Reserve Chairman Kevin Worsh has previously indicated that the productivity boom associated with this technology may give the central bank more room to keep interest rates at lower levels than expected under traditional circumstances.
Fears of inflationary pressures
But this optimism does not enjoy consensus within the corridors of the Federal Reserve.
St. Louis Federal Reserve Bank President Alberto Musalem has warned that the current boom in artificial intelligence is already generating inflationary pressures linked to increased demand for data centers, electric power, and memory chips, as well as a strong rise in the shares of companies operating in this sector.
Musalem said that betting on future productivity gains to reduce inflation entails a degree of risk, noting that the impact of artificial intelligence is still limited in overall productivity data despite its widespread spread.
In this context, he recalled American economist Robert Solow’s famous observation regarding the computer revolution in the 1980s, that technology was present everywhere except in productivity statistics.
The labor market under the microscope
The labor market also featured heavily in conference discussions, with debate continuing over whether AI will lead to the replacement of human labor or merely reshape the nature of jobs.
Kansas City Federal Reserve Bank President Jeffrey Schmid said data from his district does not indicate widespread replacement of workers by artificial intelligence, but it does suggest that the technology is beginning to influence new hiring decisions.
He added that most sectors witnessed a decline in employee numbers over the past year, regardless of their level of reliance on artificial intelligence, which indicates the presence of broader factors behind weak employment.
On the other hand, Williams believed that the labor markets will witness a process of rehabilitation and skills development rather than a comprehensive replacement of labor, noting that new graduates are already using artificial intelligence tools in their daily lives to a greater extent than previous generations.
Central banks use artificial intelligence
Central banks’ interest is not limited to studying the impact of artificial intelligence on the economy, but extends to its use within their institutions.
Bank of England Governor Andrew Bailey revealed that the bank’s Monetary Policy Committee uses advanced linguistic models to analyze how markets receive minutes of meetings and messages issued by the central bank.
He said that these tools help decision-makers understand how markets may interpret their decisions and statements before publishing them, adding that the uses of artificial intelligence within the bank are expanding to include programming, economic modeling, and data analysis.
Growing global interest
The Reykjavik conference reflects part of the increasing interest that central banks are paying to artificial intelligence as a factor that may reshape the global economy in the coming years.
In Italy, Italian Central Bank Governor Fabio Panetta devoted a large part of his annual speech to talking about artificial intelligence, indicating that it may raise the economy’s productivity by up to a full percentage point in the most optimistic scenarios.
He said that these gains may offset a large part of the pressures resulting from the decline in the working-age population, and help achieve more sustainable economic growth in the long term.
Between optimism about the potential to raise productivity and growth, and fears of inflationary pressures and shifts in the labor market, it seems that artificial intelligence has become one of the most important files that global central banks monitor when drawing up their future economic and monetary policies.
