Reserve Bank Warns $115 Billion AI Buildout Could Keep Rates High as Power Costs Rise
Updated
Updated · Sydney Morning Herald · Nov 8
Reserve Bank Warns $115 Billion AI Buildout Could Keep Rates High as Power Costs Rise
3 articles · Updated · Sydney Morning Herald · Nov 8
Summary
Sarah Hunter said Australia’s AI-driven data-centre boom could keep interest rates higher for longer, with firms globally competing for scarce savings to fund rapid capacity expansion.
Data-centre investment has risen 10-fold in three years, and the RBA expects $115 billion to be spent by 2028—about 2% of GDP a year—while projects also compete with other construction for trade workers.
The bank said that surge is already reshaping its outlook: it lifted its 2026 business-investment forecast to 12% from 0.8% in May, and warned data-centre electricity demand could push wholesale power prices higher.
Four new RBA research papers also found 5.3% of Australian household financial wealth—out of nearly $9 trillion—is now tied to AI-related companies, up from 2% in late 2022.
Hunter said AI has not yet materially cut overall employment, though hiring appears weaker for younger workers in highly AI-exposed jobs and the gains from the technology are likely to be unevenly shared.
Could the massive energy and construction demands of the AI data centre boom permanently stop your mortgage rates from ever dropping again?
Will the hidden costs of powering massive AI data centres ultimately lead to soaring household electricity bills and grid blackouts?
With billions pouring into AI infrastructure, are we witnessing a tech revolution or just a massive wealth transfer to elite companies?
The $1 Trillion AI Infrastructure Boom: How Rate-Insensitive Tech Spending Is Reshaping Inflation, Energy Markets, and Financial Stability
Overview
In late 2026, a massive surge in corporate capital spending on AI data centers, advanced chips, and power infrastructure is reshaping the global economy. Despite central banks raising interest rates to fight inflation, tech giants with huge cash flows continue investing, making their spending less sensitive to rate hikes. This relentless demand drives up hardware and electricity prices, straining supply chains and regional power grids, and causing higher costs for households. The rapid expansion also creates labor shortages in skilled trades and pushes firms to use complex off-balance-sheet financing. As a result, policymakers are forced to rethink traditional monetary tools and introduce new regulations to manage financial risks and protect consumers.