Bank of Japan’s Uchida warns AI’s economic boost comes with risks

Bank of Japan Deputy Governor Shinichi Uchida has a message about artificial intelligence: it is helping the economy right now, and that is exactly why the central bank is watching it so closely.

Speaking on October 5, 2026, at the ECONDAT 2026 Fall Meeting in Tokyo, Uchida said the BoJ will track a wide range of economic indicators to understand what AI is actually doing to Japan’s economy.

A demand shock, with fine print

Uchida described AI as a general-purpose technology that could deliver substantial productivity gains and trigger structural changes across labor markets, demand, supply and overall financial conditions.

For now, Uchida framed AI’s impact in fairly upbeat terms. He called it a positive demand shock that has supported economic activity.

“Big positive demand shock”

He also pointed to the stock market. Rising equity prices tied to AI have helped ease financial conditions on balance, according to Uchida.

Then came the catch. Uchida highlighted a rise in AI-related corporate bond issuance, which he said has put upward pressure on long-term interest rates.

Uchida went a step further. He warned that the current demand benefits from AI could be offset if corporate profits stagnate.

The measurement problem

Uchida acknowledged that assessing AI’s effect on two key concepts is difficult.

The first is the neutral interest rate, often written as r*. It is the rate that neither speeds up nor slows down the economy.

The second is the natural unemployment rate, written as u*. That is the level of joblessness consistent with stable inflation.

Uchida stressed that balanced approaches are essential to gauge these effects accurately.

He also placed AI alongside other sources of uncertainty the BoJ is tracking, including geopolitical developments and climate change.

Uchida noted that BoJ policy meetings frequently discuss AI’s implications. Those conversations reportedly cover the economy as a whole, not just the sectors directly tied to the technology.

Not the BoJ’s first look at AI

Uchida’s comments build on earlier signals from the central bank. BoJ Governor Kazuo Ueda has previously spoken about AI’s potential impact on financial stability.

The BoJ and Japan’s Financial Services Agency have also been working on the more practical side of the issue. Both have taken steps to address risks linked to generative AI, including cybersecurity concerns, through new guidelines.

Surveys indicate that generative AI adoption among Japanese financial institutions is expanding, though it remains in a developing stage.

Disclosure: This article was edited by Diego Almada Lopez. For more information on how we create and review content, see our Editorial Policy.