Bank of Canada eyeing effects of AI disruption on economy, financial stability
Advertisement
Read this article for free:
or
Already have an account? Log in here »
To continue reading, please subscribe:
Monthly Digital Subscription
$0 for the first 4 weeks*
- Enjoy unlimited reading on winnipegfreepress.com
- Read the E-Edition, our digital replica newspaper
- Access News Break, our award-winning app
- Play interactive puzzles
*No charge for 4 weeks then price increases to the regular rate of $19.00 plus GST every four weeks. Offer available to new and qualified returning subscribers only. Cancel any time.
Monthly Digital Subscription
$4.75/week*
- Enjoy unlimited reading on winnipegfreepress.com
- Read the E-Edition, our digital replica newspaper
- Access News Break, our award-winning app
- Play interactive puzzles
*Billed as $19 plus GST every four weeks. Cancel any time.
To continue reading, please subscribe:
Add Free Press access to your Brandon Sun subscription for only an additional
$1 for the first 4 weeks*
*Your next subscription payment will increase by $1.00 and you will be charged $16.99 plus GST for four weeks. After four weeks, your payment will increase to $23.99 plus GST every four weeks.
Read unlimited articles for free today:
or
Already have an account? Log in here »
OTTAWA – The Bank of Canada is keeping a close eye on how artificial intelligence will affect the Canadian economy — for better or worse.
Governor Tiff Macklem said equity valuations of AI companies by many metrics “look stretched” and a shift in sentiment about the prospect of AI could lead to a sharp downward revaluation — in turn, affecting the Canadian economy.
The comments came during a press conference on Wednesday, as the central bank lowered its benchmark interest rate to 2.25 per cent with a second consecutive cut.
The Bank of Canada released its monetary policy report released Wednesday alongside its rate cut announcement, warning against a “widespread economic downturn” if returns from artificial intelligence investments don’t pan out as expected.
“Throughout 2025, U.S. domestic demand was significantly supported by AI-related investment spending and a rise in the stock prices of businesses linked to AI,” it said in its report.
“A correction could hurt consumer confidence in the United States and in many other countries, including in Canada.”
Macklem said AI could offer the same the kind of transformation on global commerce and living standards as the personal computer or the internet.
“It has great potential. At the same time, it also has the potential to disrupt,” he said.
Macklem said it’s unclear how transformative AI will be, and what the balance between long-term game and short-term disruption will look like.
“These things have played out at very different speeds and different innovations over history,” he said.
“Our sense is this will probably play out faster than previous ones.”
Senior deputy governor Carolyn Rogers said the central bank is closely watching investments flowing into the AI industry and will review its potential risks ahead of its next financial stability report.
The financial stability report, an annual assessment of risks and resilience in Canada’s financial system, is expected to be released in May.
“For now, we’re doing what everybody else is doing: watching it closely and hoping that it doesn’t turn into a financial stability risk,” Rogers said.
This report by The Canadian Press was first published Oct. 29, 2025.
