Lagarde says AI investment boom will take time to deliver productivity gains across Europe

Lagarde Awaits More AI Gains in Productivity Unleashed in Europe

The euro zone will need time to see further productivity gains from an AI-related investment boom, European Central Bank President Christine Lagarde said. Questioned on the impact of spending on artificial intelligence in the region, she observed that it's happening as part of a wider shift toward domestic momentum. "The really interesting thing from our perspective is how it will impact productivity, and how it will contribute or not to inflation, depending on the level of improved productivity," Lagarde told reporters in Frankfurt on Thursday. "There is a little bit of that, but it's going to take a while to unleash." Policymakers kept interest rate unchanged on Thursday, noting that "the economy remains resilient in a challenging global environment." In her press conference, the ECB president referred to what she called one of the "good news stories" regarding expansion. Read More on AI: ECB's Lagarde Says Embracing AI Can Still Give Europe an Edge AI Bubble Issue Is 'Critical' to Inflation View, Hildebrand Says AI Investment to Keep Rising and Boost World Economy, OECD Says "While the net export activity and contribution to growth is on the decline, the domestic market is responding strongly," Lagarde said. "Consumption is improving a little bit, but not much. But investment is the big story." Part of that is driven by AI, she added, touching on a theme she spoke about in December after previously urging Europe to embrace the associated benefits. "We see significantly higher numbers in terms of private-sector investment," Lagarde said, citing information communication technology in particular. But AI is driving spending in a variety of categories, she said. "It's everything having to do with AI," Lagarde observed. "It's AI, it's the infrastructure that comes with it -- so construction of data centers in the pipeline -- and going through the process of licensing and authorization, it's software, it's hardware. It's a lot of investment that is coming out of that particular segment."

ECB's Lagarde: AI investment boom will take time to boost productivity By Investing.com

Investing.com -- European Central Bank President Christine Lagarde said Thursday that the euro zone will need time to see further productivity gains from an artificial intelligence-related investment boom. Speaking at a press conference in Frankfurt after the ECB kept interest rates unchanged, Lagarde noted that AI spending is part of a broader shift toward domestic economic momentum in the region. "The really interesting thing from our perspective is how it will impact productivity, and how it will contribute or not to inflation, depending on the level of improved productivity," Lagarde told reporters. "There is a little bit of that, but it's going to take a while to unleash." Access deep analyst research and full forecasts, only on InvestingPro -- grab 50% off while it lasts. Policymakers maintained their current monetary policy stance, noting that "the economy remains resilient in a challenging global environment." Lagarde highlighted investment as a key driver of growth in the euro zone. "While the net export activity and contribution to growth is on the decline, the domestic market is responding strongly," she said. "Consumption is improving a little bit, but not much. But investment is the big story." The ECB president pointed to AI as a significant factor behind rising private-sector investment, particularly in information communication technology. She explained that AI is driving spending across multiple categories. "It's everything having to do with AI," Lagarde said. "It's AI, it's the infrastructure that comes with it -- so construction of data centers in the pipeline -- and going through the process of licensing and authorization, it's software, it's hardware. It's a lot of investment that is coming out of that particular segment." This continues a theme Lagarde addressed in December, when she encouraged Europe to embrace the benefits associated with artificial intelligence.