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Bank of Japan official Uchida warned that while AI adoption has boosted demand and economic activity, a gap between inflated asset valuations and actual profits from AI investments could trigger a market pullback. The central bank is monitoring whether AI will push inflation above its 2% target and affect Japan's natural interest rate.
- AI has acted as a major demand shock supporting economic activity, but elevated stock valuations may not match the actual profits generated by AI-related investments, creating correction risk.
- Stock price gains from AI have eased financial conditions, but heavy bond issuance by AI companies has simultaneously pushed up long-term interest rates, creating conflicting pressures.
- The BOJ has identified AI-driven demand as a potential factor pushing inflation above its 2% target, which could require further monetary tightening.