Here’s another thing AI is making worse: the cost of borrowing money

November 2, 2026 — 4:00am

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If the Reserve Bank raises interest rates for millions of households with mortgages this week, as expected, it will no doubt say it’s responding to stubbornly high domestic inflation. That’s true enough, but it’s far from the only reason why borrowing money is getting more expensive.

There’s another, global factor feeding into higher borrowing costs for huge borrowers such as governments and corporations, and that’s the AI craze.

Most gloomy AI stories centre on fears of a sharemarket bubble, the prospect of mass job carnage or, if we’re really feeling grim, the risk of human extinction. Lately, however, more attention is shifting to the monumental debt pile that is paying for the AI spending spree.

The borrowing binge is not only making investors nervous about whether all the AI investments will deliver the hyped and hoped-for profits. It has also intensified a race between big corporations and governments as they compete to borrow vast sums of money, and it’s one reason why some experts think higher interest rates are here to stay. In other words, it’s a story that matters for all of us, not just financial market types.

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Stephen BartholomeuszSenior business columnist

Senior business columnist

The companies at the heart of these debt worries are the “hyperscalers” – tech giants such as Google and Microsoft, which are behind the staggering........

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