Bank of Japan (BOJ) deputy governor Shinichi Uchida said on Monday, October 5, that the widespread adoption of artificial intelligence around the world is acting on the economy as a major positive demand shock — but warned of a market-correction risk if investor expectations are not met. He made the remarks in his opening speech at the ECONDAT 2026 autumn meeting; the speech text was published on the central bank's official website.
What Uchida said
Uchida stressed that the AI boom is affecting the economy so far mainly through the demand side. According to him, the technology's mass adoption has put upward pressure on the economy and prices, which has eased financial conditions on balance.
"It is a big positive demand shock, which has put upward pressure on the economy and prices," Uchida said.
Uchida noted the tentative view that the demand side came first and made financial conditions more accommodative — but added a warning:
"Tentatively, it appears the demand side has come first and made financial conditions more accommodative on balance. But there is a risk of correction if profits do not follow."
According to Reuters, Uchida noted in his speech that AI is already affecting the indicators central banks use to assess monetary policy. If corporate profits fail to live up to current expectations, this easing could reverse.
By a demand shock, Uchida means a powerful external impulse to the economy: demand for AI raises aggregate demand for goods, services and investment, putting upward pressure on prices and economic activity. In such a situation financial conditions ease — that is, borrowing gets easier, asset prices rise and market participants perceive less risk.
The demand shock and the productivity payoff
Uchida's assessment is that AI is stimulating the economy so far mainly by raising demand, while the productivity payoff has yet to fully materialize. Over the longer term the technology could boost productivity and accelerate capital accumulation — which in turn could affect the country's natural rate of interest (r-star). But the productivity effect has not yet fully shown itself: the demand shock came first, and whether it will be offset by economic gains remains a question for the future.
Seen in this light, Uchida's warning is clear: markets expect big profits from AI companies. If those profits do not arrive, today's easy financial conditions could reverse.
In other words, the same technological wave is both supporting risky-asset prices and pushing rates higher in the debt market. For central banks, tracking the balance of these two forces is becoming an important factor in monetary-policy decisions.
What it means for monetary policy
Uchida's speech shows that central bankers see the AI boom not merely as a tech story but as a macroeconomic force affecting monetary policy itself. If AI raises demand and pressures prices, that is inflationary pressure; if productivity rises, that is supply-side expansion and a shift in the natural rate of interest.
That is why Uchida specifically noted that AI is already affecting the variables central banks rely on to assess policy. For financial-market participants, his core message is simple: today's easy conditions rest largely on expectations — and expectations need to be validated by profits.
Uchida delivered these remarks as the opening speech of the ECONDAT 2026 autumn meeting. The speech text was published on Monday on the central bank's official website — that is, this is a statement of official position, not an informal comment. The fact that central-bank leadership is elevating AI to this level of the monetary-policy agenda shows that the macroeconomic significance of the technology keeps growing.
We have written about similar market concerns before — for example, Michael Burry's warning about AI-company IPOs intensified the debate about an overheated market.
