Bank of Japan Deputy Governor Shinichi Uchida has a clear message about artificial intelligence: the technology is helping the economy right now, and that is precisely why the central bank is watching it so closely.

Speaking on October 5, 2026, at the ECONDAT 2026 Fall Meeting in Tokyo, Uchida said the Bank of Japan (BoJ) will track a wide range of economic indicators to understand what AI is actually doing to Japan's economy.

A Demand Shock, With Fine Print

Uchida described AI as a general-purpose technology that could deliver substantial productivity gains and trigger structural changes across labor markets, demand, supply, and overall financial conditions. Economists reserve the general-purpose label for innovations—electricity and information technology among past examples—whose effects eventually spread across entire economies.

For now, Uchida framed AI's near-term impact on Japan's economy in fairly upbeat terms.

"Big positive demand shock," he said.

He also pointed to the stock market, noting that rising equity prices tied to AI have helped ease financial conditions on balance, according to the deputy governor.

Then came the catch. Uchida highlighted a rise in AI-related corporate bond issuance, which he said has put upward pressure on long-term interest rates. That pressure matters because long-term rates influence borrowing costs for companies and households throughout the economy. He went a step further, warning that the current demand benefits from AI could be offset if corporate profits were to stagnate.

The Measurement Problem

Uchida acknowledged that assessing AI's effect on two key concepts is difficult. The first is the neutral interest rate, often written as r*, the rate that neither speeds up nor slows down the economy. The second is the natural unemployment rate, written as u*, the level of joblessness consistent with stable inflation. Both estimates serve as yardsticks in central banking, informing judgments about whether policy settings are stimulative or restrictive. Uchida stressed that balanced approaches are essential to gauge these effects accurately.

Uchida also placed AI alongside other sources of uncertainty the BoJ is tracking, including geopolitical developments and climate change. He noted that BoJ policy meetings frequently discuss AI's implications, and those conversations reportedly cover the economy as a whole, not just the sectors directly tied to the technology.

Not the BoJ's First Look at AI

Uchida's comments build on earlier signals from the central bank regarding the technology. BoJ Governor Kazuo Ueda has previously spoken about AI's potential impact on financial stability.

The BoJ and Japan's Financial Services Agency have also been working on the more practical side of the issue. Both have taken steps to address risks linked to generative AI, including cybersecurity concerns, through new guidelines.

Surveys indicate that generative AI adoption among Japanese financial institutions is expanding, though it remains in a developing stage. Together, the new guidelines and the adoption trends give Japan's financial authorities a concrete set of developments to watch while the macroeconomic picture Uchida described continues to unfold.