BOJ’s Uchida Warns AI Could Reshape Monetary Policy Dynamics
Bank of Japan Deputy Governor Shinichi Uchida has highlighted the potential impact of artificial intelligence (AI) on key monetary policy parameters. He noted that AI adoption could influence both demand and supply sides of the economy, affecting prices, productivity, and financial conditions.
Uchida described AI as a significant positive demand shock, suggesting it could boost economic activity and prices. On the supply side, he mentioned that AI might enhance productivity and support capital accumulation. The effects on demand are already visible, contributing to more accommodative financial conditions.
However, Uchida cautioned that a correction could occur if corporate profits do not align with the rapid adoption of AI. He also pointed out that AI may influence several parameters relevant to monetary policy, including the output gap, financial conditions, and “star variables,” which represent long-term economic equilibrium.