BOJ deputy Uchida says AI boom lifts demand, warns markets
The Bank of Japan (BOJ) is paying close attention to how artificial intelligence (AI) is changing the game for Japan's economy.
Deputy Governor Shinichi Uchida says the recent AI boom has boosted demand and pushed up asset prices, calling it a "big positive demand shock, which has put upward pressure on the economy and prices."
But he also cautions that if those high hopes for profits don't pan out, markets could take a hit.
BOJ: AI effect uncertain, rates up
The BOJ admits it's tricky to measure exactly how AI will affect Japan's natural rate of interest, since the overall effect is still hard to gage.
With AI-driven demand possibly pushing inflation above the BOJ's 2% target, they've already raised interest rates twice this year.
On top of that, Japan relies heavily on Middle Eastern oil, so the energy shock caused by the Iran war and a weak yen, which increases import costs, are adding extra pressure as the BOJ tries to keep things stable.