Key facts
- Global inflation risks from Iran war and AI demand discussed at IMF meetings.
- BOJ Governor Ueda to signal scope for a December rate hike.
- US Treasury official urges Japan to tighten policy amid non-deflationary environment.
- BOJ board member Koeda sees considerable upside risks to inflation.
Central bankers gathering in Bangkok acknowledged that the artificial intelligence boom is creating fresh inflation pressures and financial risks, as investment pours into AI-related projects before productivity gains materialize. Federal Reserve Chair Kevin Warsh described the situation as a 'shock' that is hitting the demand side of the economy. The prospect of structurally higher borrowing costs poses a challenge for governments that accumulated significant debt during years of near-zero interest rates. US Treasury Undersecretary Erin Browne urged Japan to adjust its monetary policy, stating the country no longer faces a deflationary environment.