Bank of Japan Deputy Governor Shinichi Uchida stated that artificial intelligence represents a massive positive demand shock exerting upward pressure on the economy and prices. While AI adoption boosts productivity and capital accumulation on the supply side, Uchida noted that demand-side effects are currently emerging first, making financial conditions more accommodative overall.
Uchida warned of potential correction risks if corporate profits fail to keep pace with AI-driven expansion. He emphasized that AI will fundamentally alter core monetary policy parameters, including the output gap, financial conditions, and the natural rates representing the economy's long-run equilibrium. These factors have made AI a central topic at central bank policy meetings globally.
BOJ Deputy Governor: AI Acts as Massive Demand Shock Reshaping Monetary Policy
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