RBA Governor Says AI May Be a Bubble With No Productivity Boost Yet
Reserve Bank of Australia Governor Michele Bullock said on September 22, 2026, that artificial intelligence could be a market bubble and has not yet made the Australian economy more efficient.
Speaking at a Committee for Economic Development event in Sydney, she said a disorderly fall in technology valuations could hurt economic activity. The remarks were published by the RBA as a Fireside Chat at the Committee for Economic Development featuring Michele Bullock RBA.
"Some people think it's a bubble, some people don't. I don't have a particular view one way or the other, but it's a risk that I think we're watching," Bullock said The Guardian. A bubble means investors may have pushed prices far above what companies can earn. It is like a house priced far above the rent it can bring in. She said all central banks are "a little bit worried" about AI valuations.
"AI is the great white hope to improve productivity," she said on September 22, 2026. Productivity is output per hour of work. She said the RBA and counterparts overseas had seen little sign of that effect so far. Costs of adopting AI and investment in datacentres were adding to inflation, or a general rise in prices, instead of reducing it.
She cited research from South Korea's central bank. Employees using AI produced the same output but worked 1.5 hours less each week. Output per hour rose. Total output did not.
The comments link to Australia's intergenerational report. It projected inflation-adjusted output per person would rise from $99,200 in 2026 to $157,300 by 2066, based on a "profound" boost from AI. That plan assumed productivity growth of 1.2% a year. At 0.8% growth, output per person would reach only $136,600 by 2066.
Bullock also warned AI could lead to a difficult period with higher unemployment Capital Brief. The RBA's Expert Advisory Group had discussed AI and productivity at its meeting on June 3, 2026. In background, Bullock delivered a speech titled 'Technology and the Future of Central Banking at the RBA' to the 60th Shann Memorial Lecture in Perth in September 2025, and said then the RBA is not using AI to formulate or set monetary policy or any other policy. She had also said recent rate cuts were expected to support spending by households and businesses.
The broader context here is the collision between asset prices, potential output and fiscal arithmetic. Central bankers watch equity valuations through wealth effects, cost of capital and credit conditions. A sharp repricing can tighten financial conditions even without a policy move. At the same time, productivity shapes potential growth, neutral rates and debt sustainability. If AI lifts valuations without lifting measured output, policy faces looser financial conditions now and tighter supply constraints later.
Looking at what this means for policymakers, the intergenerational arithmetic is the pressure point. Long-run budgets built around 1.2% productivity growth leave limited margin if AI gains arrive as shorter hours rather than higher national income, or if datacentre buildouts add to demand before wider software use cuts costs. Valuations do not set policy. Expectations built into those valuations shape consumption, investment and revenue forecasts that do.
