Australia’s AI boom risks demand surge and higher rates

Signage for the Reserve Bank of Australia (RBA) at the central bank's building in Sydney, Australia. Photographer David Gray/Bloomberg

SYDNEY: Australia’s data centre boom risks pushing demand beyond the economy’s supply capacity, fuelling inflation and requiring the Reserve Bank to run higher interest rates, according to James McIntyre at Bloomberg Economics (BE).

The surge in spending could push capital expenditure above 2% of gross domestic product (GDP) in 2026-27, McIntyre, BE economist for Australia, said in a research note.