Australia’s central bank may need to keep interest rates elevated longer than expected due to surging AI-driven data center investment. Bloomberg Economics estimates that capital expenditure on data facilities could surpass 2% of Australia’s GDP in fiscal year 2026-2027, with projections ranging from A$111 billion to A$155 billion over the next decade. This concentrated investment is straining construction capacity, siphoning skilled labor, and spiking energy demand, which could triple by 2030. The RBA’s current cash rate stands at 4.35%, and officials have warned that electricity prices could rise by 26% without substantial new investment in renewable energy generation.
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