The European Central Bank (ECB) is exploring how artificial intelligence (AI) can help them understand inflation better.
In a recent blog post, Myriam Moufakkir, the bank’s Chief Services Officer, outlined how AI is becoming a valuable tool in the ECB’s toolkit.
For a long time, the ECB had trouble getting inflation predictions right, which led to delays in making important decisions about their monetary policy. People questioned the accuracy of their models and analyses.
Now, like many other companies, the ECB is looking into using AI to process and study lots of data, such as prices, company information, and banking documents. This will help them make smarter choices when it comes to monetary policy.
The ECB says that artificial intelligence will allow them to collect, analyze, and make sense of this massive amount of data, which is essential for things like analyzing risks, supervising banks, and deciding on monetary policies.
With AI, the ECB hopes to get a better understanding of how prices behave and why inflation happens. They collect lots of price data, but it’s messy and not easy to use for calculating inflation. AI will help them organize this data and improve their analyses.
ECB plans to use AI to make their communication simpler. Some people find their language too technical and hard to understand. They want to change that.
The ECB is also exploring the potential of large-language models like ChatGPT. These models have applications ranging from generating code drafts for experts to improving communication with the public by making ECB’s texts more accessible. The ECB acknowledges the importance of responsible AI usage and is mindful of data privacy, legal constraints, and ethical considerations.
Key AI Initiatives at ECB
- Automating Data Classification: Statisticians at the ECB collect and classify data from over ten million European legal entities. AI, particularly machine learning, aids in automating the time-consuming classification process, freeing up staff for higher-level tasks.
- Enhancing Inflation Analysis: AI, coupled with web scraping and machine learning, allows the ECB to gather real-time data on product prices. However, these data are often unstructured. The ECB is working with economists and researchers to employ AI in structuring this data for more accurate inflation analysis.
- Banking Supervision: ECB supervisors analyze various text documents, including news articles and supervisory assessments. The Athena platform, powered by natural language processing models, streamlines the process, enabling quick extraction and comparison of information.
