Central bank urged smaller businesses to invest in AI or risk future inflation
Canada’s central bank leadership sharpened its message on artificial intelligence, warning that if AI investment stayed concentrated in large companies, it risks worsening the country’s productivity slump and stoking future inflation pressures.
Senior deputy governor Carolyn Rogers told an AI conference in University of Toronto that big firms have the scale to make big bets on technology, but that Canada would only repair its weak productivity record if small and medium‑sized businesses adopt AI in a meaningful way.
“You also don’t want things concentrated in big firms. That’s not good for productivity either,” she said. “If all of the gains are concentrated in big firms, they aren’t likely to translate to gains across the economy.”
In 2023, 98% of companies were defined as small, while medium‑sized firms accounted for another 1.5%. Just 0.3% were large employers, yet those firms employed more than a third of Canadians and were most likely to make large capital investments.
Rogers argued that stronger investment in machinery, equipment and intellectual property, including AI, is essential “to make long‑term fundamental change, to raise growth on a more permanent basis, to increase production per employee, increase our living standard.”
Tiff Macklem, the Bank of Canada’s governor, previously underlined that AI adoption among Canadian firms remains limited, even as the technology offers a potential way to raise the economy’s speed limit without reigniting inflation.
Policy thinkers also pushed for a more targeted debate about who would capture AI’s gains. “We can’t just blindly chase productivity gains through AI adoption itself,” said Vass Bednar of the Canadian Shield Institute. “Gains will accrue to the firms that own the intangible layer like data, intellectual property, models and computing access.”
For mortgage lenders and brokers, the message cuts both ways. AI already promised to automate document handling, triage complex files and sharpen credit analytics, but deployment remains patchy. New research from MIT’s Project Iceberg suggested AI could technically handle nearly 12% of work tasks and that only a tiny share of staff qualified as true “AI practitioners,” with most employees using the tools superficially.
Rogers warned that the transition would not be painless. She described a low hire, low fire labour market in which entry‑level roles and youth employment appeared to be shifting as firms experimented with automation, even if hard data have yet to show a clear AI effect.
“Monetary policy is fundamentally about tradeoffs,” she said, adding that the central bank’s job during periods of technological upheaval is to ensure “we don’t want to add to a period of disruption and transition with inflation.”
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