Bank of Japan Warns AI Demand May Push Up Inflation

BlockBeats News, August 3rd - The Bank of Japan said on Monday that the global demand for artificial intelligence (AI) could create sustained upward pressure on inflation in Japan, indicating growing concerns at the central bank about inflation risks, which could further strengthen its recent case for raising interest rates. The Bank of Japan pointed out that in the medium to long term, the application of AI should enhance productivity and, as businesses and workers gradually adapt to AI technology, exert downward pressure on prices. However, the Bank of Japan stated: "In the short term, the inflationary impact of AI-driven investment frenzy may outweigh the effect of productivity improvements." This is because increased investment activity will boost demand and drive prices higher.

The Bank of Japan stated that the global rise in producer prices is partly due to the Middle East conflict leading to higher oil prices, and another part is the "global demand positive shock" of AI-related goods. The report said that the spillover effects of AI demand will persist for some time. At the same time, coupled with the impact of the depreciating yen on rising import costs, domestic inflation in Japan may continue to face sustained upward pressure. (Kyi)