BOJ says AI boom may have eased financial conditions, warns of market risks

October 5, 2026 - 01:32

Bank of Japan Deputy Governor Shinichi Uchida said the global boom in artificial intelligence may have helped ease financial conditions by driving demand and lifting asset prices, while cautioning that markets could face a sharp reversal if expected profits fail to materialize.

Speaking on the theme, Uchida noted that the rapid expansion of AI related investment has supported economic activity and contributed to a sense of looser financial conditions in some economies. He pointed out that rising equity valuations tied to AI optimism have made borrowing and fundraising easier for firms, even as central banks in several countries have kept interest rates elevated.

However, the deputy governor warned that such conditions can shift quickly. If the earnings and productivity gains that investors expect from AI do not appear, asset prices could fall and financial conditions could tighten abruptly. He said the central bank is watching these developments closely because they affect both domestic and global markets.

Uchida also stressed that the BOJ will continue to assess risks to Japan's economy and prices, including spillovers from overseas technology trends. He said policy decisions will depend on incoming data, and he declined to comment on the timing of any future rate changes. The remarks highlight how the AI investment wave is becoming a factor in how central banks judge market stability and the path of monetary policy.