At a conference in London on Thursday, she said the bank was testing a number of uses for the technology, from providing early warning signals of financial crises to analyzing the labour market, and found that it can produce useful short-term predictions about the direction of consumer prices.
She said there are “massive” opportunities to use AI to help track the economy but cautioned that the stakes are high for central banks using it for monetary policy and financial stability efforts.
The BOE is embracing AI at a time when it is upgrading its technology infrastructure and overhauling its forecasting and communications practices following a review by former Federal Reserve Chair Ben Bernanke.
It also comes as turmoil at the Office for National Statistics undermines market confidence in key data on the labour market and consumer prices, with the agency on Thursday saying it overstated the pace of inflation in April due to erroneous information from the government’s transportation department.
The central bank is embarking on a series of targeted AI experiments as it builds up to a strategy on how to use the technology. Governor Andrew Bailey suggested earlier this week that he had used AI to help him shorten speeches.Greene said that BOE staff had used “machine learning techniques” to help produce inflation forecasts. Officials found they are “more accurate at forecasting CPI at shorter time horizons so it can be useful there, particularly as cross checks to more traditional models,” she added.Greene also said staff had used AI “to figure out how comms might be improved and picked up more in the media.”
While Greene saw use cases for the central bank’s day-to-day operations, she was more skeptical about AI advances boosting the UK economy’s anemic growth and productivity rates in the near term.
“There is an argument that AI should boost productivity growth, and quite quickly. This could happen through income effects, so workers will earn more and will either work less and have more leisure time, or will work the same and just consume more,” she said. “I have my doubts that we’ll see real productivity gains over my forecast horizon, which again is two to three years.”