BoJ Deputy Governor Uchida says adoption of AI might have positive and negative implications for productivity and labour markets, adds AI has become a key topic of discussion among central banks, including at the BoJ's monetary policy meetings

Says: AI has implications for several key monetary policy variables, including the output gap, financial conditions and neutral-rate measures. AI represents a strong positive demand shock, adding upward pressure to both the economy and prices. AI could also influence the supply side, potentially in a positive way by lifting productivity and supporting capital accumulation. AI has lifted stock prices and eased financial conditions, while heavy bond issuance by AI-linked companies has added upward pressure to long-term interest rates. We will keep carefully assessing economic and financial indicators to build a consistent view of AI adoption’s impact. Tentatively, the demand-side effects of AI appear to have emerged first, making financial conditions more accommodative overall, though there is a risk of a correction if profits fail to keep pace.