What warning did the Bank for International Settlements (BIS) issue about the AI boom's impact on central banks' ability to set interest rates, including the risk of policy miscalibration, the simultaneous demand and supply effects blurring cyclical economic signals, the surge in

On July 28, 2026, the Bank for International Settlements (BIS) published a Bulletin warning that the AI boom is making it significantly harder for central banks to judge the state of the economy and set interest rates, creating a material risk of policy miscalibration .

Core warning: Blurred cyclical signals

The BIS warned that by simultaneously affecting demand and supply, AI "blurs cyclical signals, complicating central banks’ assessment of underlying economic conditions and monetary policy calibration" . The demand-side effects (investment boom, rising asset valuations) are already large and observable, while the supply-side effects (productivity gains) remain uncertain in both scale and timing. Because these forces push growth, labor markets, and inflation in different—sometimes offsetting—directions, the net macroeconomic impact is unclear .

Key evidence cited by the BIS

• Debt-financed investment surge: The AI boom is driving a large, increasingly debt-financed investment wave. AI-related capital expenditures have reached around 1% of GDP in the most exposed economies .
• Private credit: Private credit loans to AI firms grew from near zero in 2016 to $200 billion by 2025 . The BIS also highlighted that private credit funds' lending to software firms has grown rapidly, with outstanding loans reaching over $500 billion (19% of total direct loans) by end-2025 .