BOJ deputy warns AI hype could spark market correction and shift natural interest rate

Bank of Japan Deputy Governor Shinichi Uchida warned that a surge in artificial‑intelligence demand could lift asset prices and spark a market correction if the hoped‑for AI returns do not appear. He said AI is already reshaping the financial landscape, driving investors to bid up tech‑related stocks and other assets. Uchida noted that rising prices driven by AI hype could become unsustainable, leading to a pull‑back when profits fall short. He added that strong, lasting demand for AI tools might also shift Japan’s natural rate of interest, the level that would exist without policy intervention. The deputy governor suggested that if AI drives long‑term productivity gains, the central bank may need to adopt a more accommodative stance, while a bubble could force tighter measures. His comments were recorded on 03 Oct 2026 at 01:30 AM IST. ## Context Artificial intelligence is rapidly entering many sectors, and investors often price future growth into assets today. When expectations prove overly optimistic, the correction can be sharp. Japan’s natural interest rate is a benchmark that guides monetary policy; a shift could affect borrowing costs across the economy.