BIS study warns AI’s energy appetite is clouding interest rate signals

Central bankers already have a tricky job. They read the economy’s dashboard and decide where interest rates should go. A new study from the Bank for International Settlements suggests artificial intelligence is smudging the gauges. The paper argues that AI’s environmental footprint, from rising electricity demand to strained power grids, could obscure the readings officials use to set policy. Those include capacity utilization and inflationary pressure, which carry real weight when rate decisions get made. What the BIS paper actually says BIS Paper No. 174 was published on October 8, 2026. Its authors are economists Leonardo Gambacorta and Salvatore Polizzi. On the positive side, the authors credit AI with supporting both climate mitigation and adaptation. They point to gains in energy efficiency, better forecasting, and innovation in low-carbon technologies. The paper warns that AI systems, especially those housed in data centers, add significantly to electricity consumption and the emissions that come with it. The International Energy Agency anticipates global data center consumption could exceed 945 terawatt hours by 2030, more than double current levels. The paper also notes t...