Summary

Manoj discussed how AI is arriving in an economy already shaped by ageing demographics, tight labour markets and strong fiscal support, making broad deflation unlikely despite genuine technological progress. He argued that productivity was improving even before AI, that households and firms remain resilient, and that services inflation is unlikely to collapse unless labour demand truly cracks. Drawing on earlier industrial revolutions and China’s deflationary impact on global goods, he stressed that technology’s effects depend heavily on the macro backdrop, and today’s backdrop is inflationary rather than deflationary. AI will boost efficiency, he said, but overcoming demographic inflation, fiscal expansion and tight labour supply would require far more disruption than current evidence suggests.

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