BoJ Deputy Governor Uchida Flags AI as Major Focus for Monetary Policy
Bank of Japan (BoJ) Deputy Governor Shinichi Uchida highlighted the growing importance of Artificial Intelligence (AI) in central bank discussions, including BoJ policy meetings. Uchida noted that AI adoption presents both opportunities and challenges for productivity and labor markets, while also influencing key monetary policy parameters like output gaps, financial conditions, and inflation expectations.
The deputy governor described AI as a major positive demand shock, exerting upward pressure on the economy and prices. He noted that AI could boost productivity and capital stock accumulation on the supply side, while also driving up stock prices and easing financial conditions. However, significant bond sales by AI-related firms have pushed long-term interest rates higher, adding complexity to the economic outlook.
Uchida emphasized the need for close monitoring of economic and financial indicators to assess the consistent effects of AI adoption. While the demand-side impact of AI appears first, making financial conditions more accommodative, there remains a correction risk if profits do not materialize as expected.
The USD/JPY pair was down 0.21% at 157.50 at the time of writing. Uchida’s speech, which scored 7.2 on FXS Speechtracker, was seen as a steady but meaningful policy-relevant intervention. The emphasis on AI as an upside risk to growth and prices tilts the tone modestly hawkish, suggesting the BoJ may be less tolerant of persistent inflation surprises.