Bank of Japan Deputy Governor Shinichi Uchida described AI investment as a demand shock already affecting the economy and prices. Equity gains ease financial conditions, while large technology-company bond issues push long-term rates higher. He said productivity and labour-market effects remain difficult to assess. His October 5 speech addresses how monetary policy responds to these competing forces.
Bank of Japan Deputy Governor Shinichi Uchida described artificial intelligence investment as a strong demand shock in his October 5 speech. Spending on the technology is already putting upward pressure on economic activity and prices. He also identified a possible market correction if corporate profits fail to meet expectations.[1], [2]
Uchida said rising stock prices ease financial conditions, while large bond issues by AI-related companies push long-term interest rates higher and tighten them. His tentative assessment is that the demand effect arrived first and that financial conditions have become more accommodative overall. The size and timing of the different effects remain uncertain.[1]
The technology could raise productivity and accelerate research, but it could also make existing intellectual skills obsolete. Workers unable to adapt to new roles may face difficulties. Uchida said stronger technical capabilities could allow some people to benefit more, increasing inequality.[1]
Productivity and capital accumulation could affect the neutral interest rate, the level that balances the economy. Uchida said those effects are difficult to gauge. The remarks opened a conference on AI and big data, including the use of unconventional information in central-bank research. The bank’s assessment also covers sectors less affected by AI.[1]
