Lagarde: The European Central Bank is Closely Monitoring the Impact of AI on the Job Market, No Wave of Layoffs Seen Yet

European Central Bank President Christine Lagarde stated that the ECB will closely monitor whether the widespread adoption of artificial intelligence will lead to job losses. However, she also pointed out that there are currently no signs of large-scale layoffs.

Lagarde told members of the European Parliament in Brussels on Thursday that both Europe and the United States have seen large-scale AI investments and that certain productivity improvements are already visible. However, the impact on the job market is "not yet visible." She made it clear that the ECB will remain "extremely vigilant" regarding the potential employment consequences of AI.

Her comments echo concerns expressed by Federal Reserve officials. Fed Governor Lisa Cook warned on Wednesday that AI-driven increases in unemployment may exceed the capabilities of monetary policy to address; JPMorgan Chase CEO Jamie Dimon also reiterated this week that AI technology may put professions such as truck drivers at risk of being phased out.

Lagarde noted that current academic literature shows that large-scale AI investment is bringing a certain level of productivity improvement, but the consequences at the level of the job market have not yet appeared.

"The literature currently tells us that large-scale investment is driving some productivity improvements," she said, "but we have not yet seen the consequences for the labor market, nor the wave of major redundancies that people worry about. We will remain extremely vigilant in the future."

She added that ECB data and surveys show that Europe is not lagging behind the United States, and the benefits of productivity gains even extend to the small and medium-sized enterprise (SME) sector.

When assessing the impact of AI on economic growth and inflation, Lagarde pointed out that the "large-scale investment wave" in the US has triggered "a substantial amount of follow-up investment" in Europe, and that Europe is moving forward in parallel and benefiting equally.

"We are starting to see some identifiable results and data," she said. "Europe is not falling behind; Europe is also making progress and reaping the benefits of productivity gains, including at the SME level, which is what our data and surveys reveal."

Lagarde also noted that the rapid evolution of AI poses new challenges for policymakers, as the speed of structural economic change now far exceeds past experience.

"These technologies only emerged three years ago, and the pace at which they are supplanting each other and iterating is, in my view, unprecedented," she said. "This is a combination of uncertainty, economic shock, and transformative factors, happening at an incredible speed."

This indicates that when assessing the impact of AI on inflation and employment prospects, the ECB is facing new challenges that traditional policy frameworks may not fully address.