BOJ Deputy Governor: AI Bond Issuance Pushes Up Long Rates

Bank of Japan Deputy Governor Shinichi Uchida said on 5 October 2026 that AI is “a big positive demand shock” and that large-volume bond issuances by AI-related companies are putting upward pressure on long-term interest rates. He added that there is “a risk of correction, if profits do not follow.” This publication read the English text of his remarks on the Bank of Japan’s website. They are opening remarks at a conference, not a policy decision.

What the Remarks Were

Uchida spoke at the opening of the ECONDAT 2026 Fall Meeting, under the title “AI, Big Data, and Monetary Policy.” He said the conference would look at two roles AI and big data play for central banks: advancing analytical methods and research, and the economic implications of AI adoption for productivity and labor markets.

On analysis, he said AI and big data appear to be removing two constraints, the limitation of computational power and the limitation of data availability. He gave examples including high-frequency human mobility data at the time of the pandemic and, more recently, alternative data from vessel tracking services to monitor the impact of the Middle East conflict on crude oil imports and supply chains.

Four Ways He Says AI Reaches Monetary Policy

In his closing notes Uchida said AI has implications for some core parameters of monetary policymaking, including the output gap, financial conditions and star variables. He listed four factors.

First, he said, AI 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 he said might in turn affect r-star.

Third, he said it “has boosted stock prices, making financial conditions easier, while large-volume bond issuances by AI-related companies have been putting upward pressure on long-term interest rates, thereby making financial conditions tighter.” Fourth, he said it “may change the labor markets structurally.”

He said each of these factors affects the conduct of monetary policy “in different directions and in different time horizons.”

The Balance and the Correction Risk

Uchida said that, tentatively, it appears “the demand side has come first and that it has been making financial conditions more accommodative on balance, while there is a risk of correction, if profits do not follow.”

He said the effects on r-star and u-star are “hard to gauge” at this juncture. He also said “AI has become a key topic of discussion” at the Bank’s Monetary Policy Meetings, as might be the case for central banks around the world.

What He Said He Does Not Know

On size and timing, Uchida said: “But, to what extent and degree? In what time horizons? We don’t have a clear answer yet.”

He described his own aim as making “balanced decisions, neither underestimating nor overestimating the impacts of AI.” He said it is possible that conventional statistics cannot keep up with the speed of AI adoption, while alternative data may help.

The Structural Read

Two statements in the remarks are easy to run together. Uchida describes AI’s effect on the economy and prices as a demand shock that “has put upward pressure” on them, which he states as having happened. He describes the supply-side effect, which he says could be positive through productivity and capital stock and might in turn affect r-star, in the language of “could,” “perhaps” and “might.”

The bond-issuance point is the one that ties the technology to its financing. Uchida says large-volume bond issuances by AI-related companies are putting upward pressure on long-term interest rates, and he sets that against the boost to stock prices in his account of financial conditions. He names no company and gives no amount of issuance, so the remarks do not say which issuers or how much.

He is explicit about how little is settled. He says each factor affects monetary policy in different directions and over different time horizons, that the effects on r-star and u-star are hard to gauge at this juncture, and that conventional statistics may not keep up with the speed of AI adoption.

Three Implications

FINANCING IN A POLICY SPEECH A central bank deputy governor lists bond issuance by AI-related companies among the factors in his account of financial conditions, and says it makes them tighter at the same time as AI-driven stock gains make them easier. That is his description of how the two effects net, and he calls it tentative.

A CONDITIONAL, NOT A CALL The correction risk is conditional: he ties it to the case where profits do not follow. In the text this publication read, he does not say profits will not follow and gives no probability or date.

WHAT REMAINS UNKNOWN The remarks give no size for any of the four effects, no issuance figure, no company and no policy decision. On extent, degree and time horizon he says, “We don’t have a clear answer yet.” This publication read the English text only.

What Is Not Established

The text of the remarks gives no estimate of how large any of the four effects is, no figure for AI-related bond issuance and no policy decision. This publication found no company named in it.

This publication read the English text only. It did not read the Japanese version or any questions and answers, and did not seek a response from the Bank of Japan. The four-factor list is the Deputy Governor’s own, not this publication’s.

The Bottom Line

In opening remarks on 5 October, Bank of Japan Deputy Governor Uchida named four ways AI reaches monetary policy: a demand shock, the supply side, financial conditions and labor markets. On financial conditions he said stock gains make them easier and AI-related bond issuance makes them tighter, and that tentatively the balance is more accommodative, with a risk of correction if profits do not follow. On size and timing he said, “We don’t have a clear answer yet.”