The Bank of Japan said on Monday global AI-related demand could place sustained
upward pressure on Japanese inflation, a development that could reinforce the
case for its recent policy tightening. It noted that while AI adoption should
raise productivity over the medium to long term and exert downward pressure on
prices as firms and workers adjust, in the short term AI-driven investment could
lift demand and push prices higher, potentially outweighing productivity gains.
The BOJ flagged rising global producer prices partly driven by Middle
East-related oil moves and partly by a positive global demand shock for
AI-related goods, and said those spillovers, combined with import-cost increases
from yen depreciation, could keep domestic inflation elevated for some time.
