According to a press release, “the special chapter of the
BIS Annual Economic Report 2024 lays out the implications of new AI
applications for central banks. AI is poised to impact the financial system,
labour markets, productivity and economic growth. “With widespread adoption, it
could enhance firms’ ability to adjust prices faster in response to
macro-economic changes with repercussions for inflation dynamics. The job of
central banks as stewards of the economy will also be directly affected as
frontline users of AI tools.
“Central bank use cases for AI include enhancing nowcasting
by using realtime data to better predict inflation and other economic variables
and to sift through data for financial system vulnerabilities, allowing
authorities to better manage risks. “Data have become an even more valuable
resource with the advent of AI and will be the cornerstone of central banks’
use of the technology.” The statement further said:
“The effects on demand and therefore on inflationary
pressures will depend on how quickly displaced workers can find new jobs, and
whether households and firms correctly anticipate future gains from AI. In the
short-run, supply could outstrip demand, which could lower pressures but those
effects could reverse over time as demand also catches up through higher
incomes. Central banks will need to stay attuned to these dynamics in their
monetary policy.