Published by Global Banking & Finance Review

Posted on November 6, 2026

· Last updated: November 6, 2026

IMF: Central Banks Must Factor AI-Driven Growth Slowdown into Inflation Strategy

Central Banks Face New Challenges Amid AI Investment Volatility

By Andrea Shalal

IMF's Perspective on AI-Driven Growth and Inflation

WASHINGTON, Nov 6 (Reuters) - Central bankers around the world would need to consider any slowdown in AI-driven growth as they assess steps in their fight against inflation, International Monetary Fund Managing Director Kristalina Georgieva said on Friday.

Georgieva said concerns about dependence on the AI investment boom and high valuations were impacting markets around the world.

"Things are going up and down, and this is likely to continue," she told an audience at IMF headquarters in Washington, adding that the volatility would complicate the job of central banks at a time when risks to price stability had been growing.

A steep rout in technology stocks on Thursday rippled through markets on fears that the Democrats' victory in the US midterm elections would increase regulatory scrutiny of AI and slow the data center build-out, sending investors to the safety of bonds.

The political jitters are hitting an AI trade already on shaky footing due to worry about return on massive spending on AI-related infrastructure, with the meltdown spurring margin calls and spooking retail investors and hedge funds alike.

Georgieva said the AI investment boom was lifting growth in some countries, helping to offset a negative oil-supply shock triggered by the war in the Middle East, but it was also adding to inflationary pressures and financial stability concerns.

The IMF last month flagged significant growth and financial stability risks from a potential ending of the AI investment boom, among other factors, including a prolonged Middle East war. At the time, it warned that a steep drop in AI investment could lead to a sharp fall ⁠in asset prices, ultimately cutting global GDP by 1.1% by 2028, including a 1.8% drop in US output.

Georgieva did not repeat the downside forecast on Friday, but acknowledged the recent market volatility.

"Should there be a slowdown in the AI-driven growth impulse, it would need to be factored in as central banks assess the necessary steps in the fight against stubborn inflation," she said.

Political Developments and Regulatory Outlook

Democrats are planning to unleash a flood of new legislation targeting artificial intelligence systems and data-center development when they take control of the US Congress in January, Reuters reported on Friday, citing congressional aides and advocates.

That would mark ​a sharp shift from the Republican-led Congress, where lawmakers largely focused on promoting AI development and declined to pass legislation restricting the ‌technology.

(Reporting by Andrea Shalal; Editing by Cynthia Osterman)

Key Takeaways

  • Central banks need to factor in any deceleration in AI‑driven growth in their inflation‑fighting toolkit, amid rising market volatility driven by dependence on the AI investment boom and lofty valuations (Reuters Nov 6, 2026) (brecorder.com)
  • IMF analysis shows that a sharp retreat in AI investment could trim global GDP by up to 1.1% by 2028, with a 1.8% hit to US output, underscoring sizeable downside risks (World Economic Outlook, Oct 2026) (investing.com)
  • Volatility stems from leveraged positions and circular financing in the AI ecosystem—including rising debt issuance by hyperscalers and investment structures that amplify risk—heightening potential for corrections (IMF Global Financial Stability Report Oct 2026) (elibrary.imf.org)

References

Frequently Asked Questions

Tags

Related Articles

QatarEnergy eyes NextDecade Train 6 supply in latest US LNG push, sources say

GSK, Moderna settle patent dispute over Moderna COVID, RSV shots

Italy not yet taking sides between Spanish and Dutch candidates for ECB chief

Microsoft is winding down Oracle deal to rent AI cloud capacity, Bloomberg News reports

AI rout sets off market alarm signals as traders brace for what's next

Central banking veterans Knot and de Cos in race to replace Lagarde at ECB

More from Finance

Explore more articles in the Finance category