{"id":439317,"date":"2026-10-05T07:42:30","date_gmt":"2026-10-05T00:42:30","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/bojs-uchida-says-ai-is-a-big-demand-shock-lifting-prices-warns-of-correction-risk-439317\/"},"modified":"2026-10-05T07:42:30","modified_gmt":"2026-10-05T00:42:30","slug":"bojs-uchida-says-ai-is-a-big-demand-shock-lifting-prices-warns-of-correction-risk","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/bojs-uchida-says-ai-is-a-big-demand-shock-lifting-prices-warns-of-correction-risk-439317\/","title":{"rendered":"BOJ&#8217;s Uchida says AI is a big demand shock lifting prices, warns of correction risk"},"content":{"rendered":"<div>\n<p dir=\"ltr\">Uchida describes AI as an inflationary demand shock that has loosened financial conditions, which leans hawkish. It argues that the BOJ&#8217;s tightening has more to do, without signalling a timetable. That supports the yen at the margin and keeps further BOJ hike expectations intact. His point that AI-related bond supply is pushing up long-term yields adds a new, non-monetary explanation for the pressure on global bond markets, including JGBs. The warning about a correction if profits don&#8217;t follow is a reminder that the central bank is watching equity valuations, so any AI-led selloff could feed straight into its assessment of financial conditions.<\/p>\n<p dir=\"ltr\">&#8212;<\/p>\n<p dir=\"ltr\">\nThe BOJ sees AI as a demand boom first and a productivity story later, which means more inflation now and a correction risk if the profits never arrive.<\/p>\n<p dir=\"ltr\">Summary:<\/p>\n<ul dir=\"ltr\">\n<li>BOJ Deputy Governor Uchida said AI has been a big positive demand shock, putting upward pressure on the economy and prices.<\/li>\n<li>He said AI is a key topic at BOJ policy meetings, with implications for the output gap, financial conditions and star variables such as the neutral rate.<\/li>\n<li>AI has boosted stocks and eased financial conditions, while heavy AI-related bond issuance has pushed up long-term rates.<\/li>\n<li>His tentative view is that demand effects came first, leaving conditions more accommodative on balance, with a correction risk if profits don&#8217;t follow.<\/li>\n<li>Longer term, AI could lift productivity and capital stock, with mixed effects on labour markets.<\/li>\n<\/ul>\n<p dir=\"ltr\">\nBank of Japan Deputy Governor Uchida said artificial intelligence has so far acted as a large positive demand shock, putting upward pressure on economic activity and prices. It has also eased financial conditions in a way that carries the risk of a correction if corporate profits fail to keep pace, he said.<\/p>\n<p dir=\"ltr\">Speaking on Sunday, Uchida said AI has become a key topic among central banks, including at the BOJ&#8217;s own policy meetings. He said the technology has implications for some of the core parameters of monetary policymaking, including the output gap, financial conditions and so-called star variables. These are the unobservable benchmarks, such as the neutral interest rate, that policymakers use to judge whether policy is tight or loose.<\/p>\n<p dir=\"ltr\">On the demand side, Uchida said AI investment has added to pressure on the economy and prices. Over time it could also affect supply, potentially in a positive way, by raising productivity and accelerating the build-up of capital stock. He added that AI adoption may have both positive and negative effects on productivity and labour markets.<\/p>\n<p dir=\"ltr\">Uchida highlighted two opposing forces in financial markets. AI has lifted stock prices, which has loosened financial conditions, while heavy bond issuance by AI-related companies has pushed up long-term interest rates.<\/p>\n<p dir=\"ltr\">His tentative assessment is that the demand-side impact has come first, leaving financial conditions more accommodative on balance. He warned, however, that a correction is possible if profits do not follow the investment boom. He said the BOJ will continue to examine economic and financial data closely to build a consistent picture of AI&#8217;s effects.<\/p>\n<p dir=\"ltr\">Uchida did not comment directly on the near-term path for interest rates. His framing of AI as an inflationary demand shock that has eased financial conditions is not a direct policy signal. It is nonetheless consistent with a central bank that sees reasons to keep tightening, while staying alert to the risk of a market setback if the AI investment cycle disappoints.<\/p>\n<p dir=\"ltr\">\n<p>                            This article was written by Eamonn Sheridan at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Uchida describes AI as an inflationary demand shock that has loosened financial conditions, which leans hawkish. It argues that the BOJ&#8217;s tightening has more to do, without signalling a timetable. That supports&hellip;<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-439317","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/439317","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=439317"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/439317\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=439317"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=439317"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=439317"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}