MNI: Bowman Hopes AI Can Bolster Data Quality For Fed Policy
MNI (WASHINGTON) - The Federal Reserve’s monetary policymaking process could be enhanced by the use of artificial intelligence tools that act as a crosscheck on sometimes unreliable or frequently revised economic data, Fed Governor Michelle Bowman said Friday.
“The data relied on to inform the Federal Open Market Committee decision-making process often is subject to revisions after-the-fact, requiring caution when relying on the data to inform monetary policy,” said Bowman in a speech.
“Perhaps the broader use of AI could act as a check on data reliability, particularly for uncertain or frequently revised economic data, improving the quality of the data that monetary policymakers rely on for decision-making.
That means policymakers should avoid excessive regulation around the use of AI in the financial sector, she said.
“Over-regulation of AI can itself present risks by preventing the realization of benefits of improved efficiency, lower operational costs, and better fraud prevention and customer service,” said Bowman.
“An overly conservative regulatory approach can skew the competitive landscape by pushing activities outside of the regulated banking system or preventing the use of AI altogether.”