The rapid expansion of artificial intelligence infrastructure is creating new risks for the global economy, with ANZ chief executive Nuno Matos warning that competition for investment capital could place further pressure on inflation and interest rates.
Speaking before a parliamentary inquiry in Canberra on Thursday, Matos raised concerns about the growing demand for funding as governments and businesses invest heavily in data centres, technology, defence and infrastructure.
He said the scale of global investment was creating an unusual economic environment, with strong equity markets coinciding with elevated borrowing costs.
“We have a very curious situation in the world where we have equity markets at record highs, basically because of the tech wave and basically because of the AI wave, but at the same time you have record highs of interest rates,” Matos said.
“It’s a dangerous situation for the world.”
The ANZ chief warned that governments were increasingly competing with private companies for long-term capital, potentially adding to inflationary pressures and making it more difficult for interest rates to fall.
The comments come as Australian businesses and households continue to navigate higher borrowing costs, with the Reserve Bank maintaining a cautious approach to inflation.
Matos also highlighted the potential economic consequences of a downturn in AI-related investment, given the significant amounts of capital flowing into the sector.
While he does not expect Australia to enter a recession, he warned that the country remains exposed to external economic shocks.
The ANZ chief also addressed the broader implications of AI adoption, including its potential impact on employment and financial security.
He acknowledged that the technology could improve productivity but warned that widespread adoption without appropriate safeguards could expose businesses and consumers to new risks, including fraud, scams and threats to critical infrastructure.
Matos called for greater international coordination on AI regulation, particularly as organisations integrate the technology into essential business operations.
His appearance before the parliamentary committee followed ANZ’s recent full-year financial results, which showed a cash profit of $7.59 billion.
The hearing also examined the profitability of Australia’s major banks, their lending practices and the challenges facing customers in the current economic environment.
Matos defended the banking sector’s performance, arguing that strong financial institutions play an important role in supporting lending and economic activity.
His comments highlight the growing relationship between technology investment and broader economic conditions, as businesses weigh the potential productivity benefits of AI against rising capital costs and financial uncertainty.
Source: ABC News
