Rehn warns on inflation and AI market risks
Bank of Finland Governor Olli Rehn said high energy prices are increasing inflation risks in the euro area, although rising long-term interest rates could slow economic growth and limit the extent to which higher energy costs spread to other prices and wages.
Rehn said energy prices are moving closer to the European Central Bank's adverse scenario while emphasizing that uncertainty surrounding the economic outlook remains high.
Rehn also warned that increased borrowing by major technology companies to finance artificial intelligence investments could pose financial stability risks.
He said a sharp correction in AI-related valuations could spread to equity and credit markets, adding that technological revolutions can transform economies while financial markets may overestimate their near-term returns.
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