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BOJ says AI boom may have eased financial conditions, warns of market risks

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BOJ says AI boom may have eased financial conditions, warns of market risks

Business News Tech AI BOJ says AI boom may have eased financial conditions, warns of market risks

BOJ says AI boom may have eased financial conditions, warns of market risks

Bank of Japan Deputy Governor Shinichi Uchida said the global AI boom may have eased financial conditions by stoking demand and boosting asset prices, but warned of the risk of a market pullback if expected profits fail to materialize.

Bank of Japan Deputy Governor Shinichi Uchida said the global AI boom may have eased financial conditions by stoking demand and boosting asset prices, but warned of the risk of a market pullback if expected profits fail to materialize. "It is a big positive demand shock, which has put upward pressure on the economy and prices," Uchida said on worldwide AI adoption in the text of a speech on the central bank's website on Monday. The technology could also raise productivity and enhance capital stock accumulation, which in turn might affect a country's natural rate of interest, he said.

"Tentatively, it appears the demand side has come first and made financial conditions more accommodative on balance," Uchida said. " While AI has boosted stock prices and made financial conditions easier, huge bond issuance by AI-related firms has put upward pressure on long-term interest rates, Uchida said. The BOJ will continue to carefully examine economic and financial data to ascertain a "consistent picture" on AI's impact, he said, adding that the overall effect on Japan's natural rate of interest was still hard to gauge.


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