RESEARCH · GLOBAL
arXiv: AI inference costs drive inflation via new Phillips curve—monetary policy must adjust for AI-driven productivity
Macroeconomic paper models how AI inference costs pass through to firm marginal costs and aggregate inflation. Shows inflation-Phillips curve changes shape when AI is material cost component. Derives optimal monetary policy under 'Inference-Cost Phillips Curve'.
WHY IT MATTERS
Central banks are now accounting for AI cost deflation in inflation forecasts. If inference costs drop 10x by 2028 (likely), Fed/ECB will face deflationary pressure forcing easing. BFSI should expect sustained lower rates through 2027.
Source: arXiv q-fin · 2026-05-21