The Bank of Japan is placing increasing emphasis on the economic benefits stemming from the global artificial intelligence boom, viewing robust demand for AI-related products as a potential buffer against the drag from energy price increases caused by Middle East conflicts.

This shift in thinking was expressed by BOJ officials at last week's policy meeting, according to a summary of meeting opinions released on Wednesday, with one board member specifically highlighting the AI impact.

"The deterioration in the terms of trade reflecting the rise in crude oil prices has been mitigated, and concerns about an economic slowdown have also eased, as a demand-side shock from the expansion of global AI-related demand has boosted overseas economies," the board member stated.

Similar to many developed nations, Japan's unexpectedly strong economic growth is also creating pressure on policymakers to tighten policy. A parallel situation is unfolding in the United States, where massive AI investments in data centers, chips, power infrastructure, and software are opening the possibility for a policy shift. South Korea, after months of sustained export growth and upward revisions to economic growth forecasts, is also gradually moving towards interest rate hikes.

While Japan is not a major producer of advanced AI chips, its companies play a crucial role in the global semiconductor supply chain, particularly in manufacturing equipment and materials.

This influence is becoming increasingly evident in trade data. Figures from the Bank of Japan show that Japan's export price index in May rose 11.7% year-on-year, the largest increase since April 1979. Within that, export prices for electrical and electronic products surged 23.9%, marking the biggest jump since comparable data became available in 1976.