Reserve Bank of Australia faces inflation risks from data center boom

Australia’s data center buildout is growing so fast it might single-handedly reshape the country’s monetary policy. Bloomberg Economics warned that capital expenditure on data facilities could surpass 2% of Australia’s GDP in the 2026-2027 fiscal year, a concentration of investment intense enough to strain construction capacity, siphon skilled labor, and spike energy demand all at once. The Reserve Bank of Australia now finds itself in an unusual position: wrestling with inflation driven not by consumer excess or commodity shocks, but by the sheer physical infrastructure demands of artificial intelligence. The numbers behind the boom The pipeline is enormous. Estimates for data center investment over the next decade range from A$111 billion to A$155 billion, with the bulk concentrated in New South Wales and Victoria. The RBA’s August 2026 Statement on Monetary Policy flagged business investment growing 10.4% year-on-year through the March quarter of 2026, with data center spending identified as a primary driver. Bloomberg Economics’ James McIntyre warned that this kind of concentrated capital deployment risks overwhelming the economy’s supply-side capacity. Construction, labor, and...