BOJ Sounds Alarm Over Global AI Demand's Inflationary Effect
The Bank of Japan (BOJ) has expressed concerns that global demand for AI-related goods could lead to sticky and lasting upward pressure on domestic inflation. According to a quarterly outlook report, the BOJ notes that while AI is expected to boost productivity in the medium to long term, its impact will be outweighed by the initial inflationary effects of increased investment.
The report cites a 'positive global demand shock' for AI-related goods as one reason for rising producer prices worldwide. The BOJ also points out that Japan's weak yen and energy shock from the Middle East conflict have contributed to higher import costs, exacerbating inflation risks.
In the short term, the BOJ estimates that AI-related demand could exert a lasting influence on consumer inflation excluding fresh food and fuel.