Lagarde sees in AI potential to reduce long-term inflationary pressures

“ A AI has the potential to help businesses produce more and, over time, greater productivity can reduce costs,” said Christine Lagarde, in a speech to the European Parliament's Committee on Economic and Monetary Affairs in Brussels.

“ Keeping everything else constant, this should reduce inflationary pressures in the long term,” she added.

After reaching record levels after the energy crisis, the inflation rate in the euro area has approached the ECB’s 2% target for price stability in recent months.

However, it has again recently accelerated to 3.2% in August, compared to 2.9% in July, mainly due to the rise in energy prices.

According to ECB projections released this September, inflation is expected to be on average 3.0% this year, 2.5% in 2027 and 2.1% in 2028, remaining above the 2% target in the forecast horizon.

This month, the ECB increased its three main interest rates by 25 basis points at a time when it seeks to prevent the current energy shock from spreading to other components of inflation.

“We don’t react to energy prices, we react if we see risks that higher energy prices will become incorporated into inflation,” Christine Lagarde explained.

The President of the ECB stressed that so far there are no signs that the energy shock is causing significant increases in wages.

Also with regard to AI, Lagarde stressed that the effects on the economy remain uncertain and will depend on the degree of technology adoption by companies: “AI is a transformative force. It can reformulate the production processes, business models and structures of the whole economy.”.

A recent ECB survey shows that 38% of companies in the single currency area already used AI at least moderately by the end of 2025, although only 7% declared significant use.

Technology should also change the labour market, as more than 50% of workers already use AI in their duties, still according to data cited by the President of the ECB.

“ The central question is whether, in the longer term and for the economy as a whole, the AI will mainly supplement or replace workers,” he said.