Bank of Japan's Uchida Highlights AI's Economic Impact and Associated Risks

During the ECONDAT 2026 Fall Meeting in Tokyo on October 5, 2026, Bank of Japan Deputy Governor Shinichi Uchida addressed the significant influence of artificial intelligence (AI) on Japan's economy. He noted that while AI is currently providing a positive demand shock, enhancing productivity and supporting economic activity, it also poses potential risks that the central bank is closely monitoring.

Uchida described AI as a general-purpose technology capable of inducing substantial changes across labor markets and financial conditions. He acknowledged the positive effects of rising equity prices linked to AI, which have eased financial conditions. However, he warned that an increase in AI-related corporate bond issuance could lead to higher long-term interest rates, potentially offsetting the current benefits if corporate profits stagnate.

Uchida highlighted the challenges in measuring AI's impact on key economic indicators, such as the neutral interest rate and the natural unemployment rate. He stressed the importance of a balanced approach in assessing these effects and indicated that discussions about AI's implications are a regular part of Bank of Japan policy meetings.

This is not the first time the Bank of Japan has addressed AI; Governor Kazuo Ueda has previously commented on its potential effects on financial stability. The Bank, along with Japan's Financial Services Agency, is actively working on guidelines to manage risks associated with generative AI, including cybersecurity concerns.