China's Central Bank to Study AI's Effects on Inflation and Markets

The People’s Bank of China (PBOC) will study how artificial intelligence could affect inflation and financial markets as it prepares monetary policy for the technology’s growing role in the economy.

PBOC Governor Pan Gongsheng outlined the plan at the 2026 Financial Street Forum in Beijing on Monday, Oct. 19. The assessment will cover AI’s effects on the economy and markets, as well as ways the central bank could use the technology in financial work.

Pan described two possible effects on inflation. AI investment could push prices higher in the short term, while productivity gains could ease inflation over the medium and long term. The different time frames are central to the bank’s assessment of how AI might affect policy.

AI has begun to affect the employment mix, though it has had no clear effect on total employment so far. The bank’s review will consider that shift alongside the technology’s potential effects on prices and economic activity.

The assessment extends beyond China. Pan described the AI boom as one of the major drivers of global stock-market gains and pointed to high correlation and volatility across financial markets. Those market effects are part of the wider changes the PBOC plans to examine.

The bank also plans to improve financing for companies developing core AI technologies. In its own work, it will explore AI for monetary policy analysis and financial risk detection. Other potential uses include payments, credit reporting and anti-money laundering work.

As it considers those uses, the PBOC will address data security and risks associated with AI models. The financing, research and financial applications form the three priorities Pan set out for the bank’s AI work.

Separately, the PBOC will study shifting the main tenor of its open-market operations from seven days to overnight. That change would make the overnight reverse repurchase rate its main policy rate. The seven-day tenor remained in place when Pan outlined the proposal, and he gave no implementation date.