Panetta calls for data-driven policy as AI reshapes productivity
Banca d'Italia Governor Fabio Panetta urged central banks to focus on realized economic data over unobservable neutral rates as artificial intelligence transforms productivity. Speaking in Kyiv on September 21, 2026, he analyzed the macroeconomic and financial stability challenges of AI.
From supply shock to demand shifts
Research by Banca d'Italia indicates that widespread artificial intelligence adoption could increase annual labor productivity growth in Italy by more than 1 percentage point.
Panetta explained that while AI represents a positive supply shock over the longer term, short-term investments in computing, energy and specialized labor are already boosting aggregate demand.
He noted that the macroeconomic effect depends on whether AI complements workers or accelerates task automation.
If income gains shift primarily to capital, weaker consumption could hasten disinflation.
Conversely, higher wages and new task creation would sustain consumer demand, prolonging upward price pressures across sectors.
Wartime resilience and market divergence
Panetta pointed to the National Bank of Ukraine as proof of institutional resilience, noting the hryvnia weathered severe shocks after policy rates were raised to 25 percent in 2022.
Turning to technological divergence, he highlighted that US equity markets attracted 742 billion dollars in net foreign purchases in 2025 on AI enthusiasm.
He argued that central banks must remain data-dependent rather than relying on unobservable r-star models, while supervisors guard against technology provider concentration.
Pragmatism beats unobservable models
Central bankers are right to downplay theoretical equilibrium models amid structural technological disruption.
Panetta astutely notes that productivity gains mean little without measuring how income is shared.
Navigating the AI era demands empirical agility over unobservable anchors.
Source: The challenge of innovation
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