Hiroshi Inoue

MNI looks at the monetary policy and political calculations of BOJ Governor Kazuo Ueda.

AI will have a significant impact on demand and add upward pressure on inflation and the economy, Bank of Japan Deputy Governor Shinichi Uchida told an industry forum on Monday. "AI has implications for some core parameters of monetary policymaking, including the output gap, financial conditions, and star variables," Uchida said at the ECONDAT 2026 Fall meeting. "First, it is a big positive demand shock, which has put upward pressure on the economy and prices. Second, it could affect the supply side, perhaps positively by raising productivity and enhancing capital stock accumulations, which might in turn affect r-star," Uchida said. The third impact could boost stock prices, easing financial conditions, "while large-volume bond issuances by AI-related companies have been putting upward pressure on long-term interest rates, thereby making financial conditions tighter," he added. "Fourth, it may change the labour markets structurally, as discussed earlier. Each of these factors affects the conduct of monetary policy in different directions and in different time horizons." While Uchida acknowledged AI's importance, he said the Bank aimed to understand how each of these factors would impact the economy within its policy framework. "But, to what extent and degree? In what time horizons? We don't have a clear answer yet. In the meantime, we will continue to carefully examine economic and financial indicators and to grasp a consistent picture of the impacts of AI adoption." It appears the demand side has come first and made financial conditions more accommodative on balance, he argued. "While there is a risk of correction, if profits do not follow. The effects on r* and u-star at this juncture are hard to gauge," he concluded.

A former BOJ economist shares his policy rate outlook.

A former BOJ economist shares his policy rate outlook.

MNI discusses the Bank's communications strategy as it nears its 2% inflation target.

The BOK Board will deliver its latest base rate call on Thursday.

MNI reports on policy deliberations at the Bank of Japan.

The BOK Board has delivered its latest Base Rate decision.

The year-on-year rise of Japan's annual core consumer inflation rate accelerated to 2.1% in September from August's 1.7% due to higher food prices excluding perishable and households' durable goods, above 2% for the first time since December 2025, data released by the Ministry of Internal Affairs and Communications showed on Friday.: https://www.stat.go.jp/english/index.html While the index was lowered by energy prices (-0.6% vs. -0.7%), food prices excluding perishable (+2.9% vs. +2.7%) and households' durable goods (+6.2% vs. +3.9%), drove it higher. The underlying inflation rate measured by the core-core CPI (excluding fresh food and energy) was 2.4% y/y in September, up from 1.9% in August and above 2% for the first time since March. Services prices, a key Bank of Japan focus, grew at 1.5% y/y in September, up from 1.2% in August. Prices for processed foods, accounting for 15% rose 4.0% from 3.7% in August. The BOJ expected the year-on-year rate of increase in the CPI (all items less fresh food) to accelerate to a level clearly above 2% from the second half of fiscal 2026. Bank officials expected core CPI to move toward 3% or higher in or after October and they judged that price moves are largely in line with the forecast made in July.

MNI discusses the factors behind the BOJ's December policy decision.