Bank of Japan says AI boom may ease financial conditions, warns of correction risk

AI enters the monetary-policy discussion

Bank of Japan Deputy Governor Shinichi Uchida said on October 5 that AI has become a recurring topic at the bank’s monetary-policy meetings. In remarks prepared for the ECONDAT 2026 Fall Meeting, he described AI investment as a positive demand shock that can support activity and prices. He said AI-related stock gains have made financial conditions easier, while large bond issues by companies investing in AI have pushed long-term interest rates upward. These forces point in different directions, so the speech did not present a settled estimate of AI’s overall economic effect.

A tentative balance, with a risk

Uchida said the demand effect appears to have arrived first and, for now, to have made financial conditions more accommodative overall. He also warned that markets could correct if profits fail to follow the investment surge. Beyond financing, he said AI could raise productivity but might also make some intellectual skills obsolete and widen inequality. The bank has not announced a policy change in response to those possibilities. Uchida stressed that the scale and timing of AI’s effects remain uncertain and that policymakers must assess the wider economy, including sectors less affected by the technology.