RBI Governor Sanjay Malhotra has said elevated valuations of AI-related assets pose a downside risk to the global economic outlook.

But the bigger concern for central banks is cyber risk, he said. The growing use of AI across financial systems adds a new dimension to it.

Malhotra made the remarks at the post-policy press conference on October 7. He was answering a question from ANI.

The RBI raised the repo rate by 25 basis points to 5.5 percent on Wednesday. It was the first hike in nearly four years.

The Governor said all AI-related risks were material. These include asset bubbles, labour disruption and financial stability.

He pointed to rising interconnection between financial institutions. IT systems now link banks, markets and payment networks.

A cyber attack on one link could spread fast. Central banks are building defences against such scenarios.

The RBI also raised its FY27 GDP forecast to 7.1 percent. Inflation for FY27 is projected at 5.2 percent.