BOJ's Uchida Says AI Boom Has Eased Financial Conditions, Warns of Correction Risk if Profits Lag

Bank of Japan Deputy Governor Shinichi Uchida said on October 5 that "the adoption of AI might have both positive and negative implications for productivity and labor markets," in opening remarks at the ECONDAT 2026 fall meeting titled "AI, Big Data, and Monetary Policy". He said AI could free workers from routine tasks and speed research, but could also "rapidly make certain forms of human capital obsolete."

Uchida framed AI's macro effect through the lens of monetary policy. So far, he said, it has acted as "a big positive demand shock, which has put upward pressure on the economy and prices." On markets, AI "has boosted stock prices, making financial conditions easier, while large-volume bond issuances by AI-related companies have been putting upward pressure on long-term interest rates, thereby making financial conditions tighter." His tentative read is that the demand side has come first and has made conditions more accommodative on balance, "while there is a risk of correction, if profits do not follow". He said the effect on the neutral rate of interest is still hard to gauge.

The same day, a study by the ASEAN+3 Macroeconomic Research Office warned that Southeast Asia, China, Japan and South Korea are more exposed than most economies to a potential collapse in the AI boom, which could undercut surging exports and send shocks across financial markets. For markets, Uchida's framing matters because a central bank that sees AI as a demand-side, inflationary force has a reason to keep normalizing policy. What to watch: whether AI-related demand features in the BOJ's next policy statement and outlook report, Japanese long-term yields as AI-linked bond supply grows, and earnings from Asian chip and hardware exporters.