What's going on here?
The Bank of Canada says artificial intelligence (AI) isn’t driving widespread job losses so far – but it is starting to show up as small productivity gains in the bank’s forecasts.
What does this mean?
Deputy Governor Michelle Alexopoulos said the central bank is tracking how AI changes work: some tasks may be automated, while new roles emerge. So far, the BoC says it hasn’t found evidence of broad worker displacement, and it’s begun to incorporate limited productivity improvements into its estimate of “potential output” – how fast the economy can grow without stoking inflation. A BoC survey of senior risk-management leaders in the financial sector supports t..
hat view, with most describing AI as decision-support software where humans still make the final call. The open question is scale: adoption could spread across the economy or stay concentrated in a few industries. And Governor Tiff Macklem has warned that even if AI raises productivity over time, the rollout could add to price pressures in the short run as firms spend to deploy it.
Why should I care?
For markets: Potential output is the Bank of Canada’s speed limit.
When the BoC thinks productivity is improving, it can raise its estimate of potential output, implying Canada can expand with less inflation risk. That shapes how it balances growth versus price stability in forecasts – and how quickly inflation might return toward target. But timing is tricky: if upfront AI spending lifts costs before efficiency gains show up, it can muddy the near-term inflation signals.
For you: Work may be reshaped before it is replaced.
The BoC’s message so far is less “jobs vanish” and more “tasks shift.” If AI mostly helps people work faster and make better decisions, some roles may move toward oversight and handling unusual cases rather than routine processing. Over time, higher output per worker can make it easier for wages to rise without automatically pushing up prices – but only if those gains spread beyond a narrow set of occupations.