Study uses AI to simulate Fed meeting
Central bank also using tech to aid operation
By: Keike Kihara
Reuters
TOKYO - A simulated Federal Reserve meeting that used artificial intelligence agents modeled on real-life policymakers showed political pressure polarized members of the board in their rate-setting deliberations.
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In a study released August 31, [2025] academics at George Washington University simulated a Federal Open Market Committee meeting using AI agents modeled on each member based on their historical policy stances, biographies and speeches.
..... The AI FOMC was then made to process real-time economic data and financial news to reach a decision.
..... The findings showed that when political pressure is applied, the AI agent common, according to the paper by Sophia Kazinnik and Tara Sinclair.
..... "This simulations shows that the Federal Reserve is only partially insulated from politics," and that "outside scrutiny can shape internal decisions-making, even in an institution guided by formal rules," they said in the paper.
..... The simulation replicates the July 2025 FOMC meeting.
..... While few central banks may be ready to have AI agents set monetary policy, a growing number of them are using the technology to streamline operations.
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The Fed conducted research using generative AI models to analyze minutes of FOMC meetings.
..... The European Central bank uses machine learning models to forecast euro-area inflation.
..... The Bank of Japan uses AI uses AI top gather information and deepen economic analyses. Research it published in December [2024] used large language models to show how key factors driving up prices may be shifting to labor costs from raw material prices.
..... Australian's central bank is testing a new AI tool that gives summaries on policy-related analytical questions, its governor, Michele Bullock, said on September 3. [2025]
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Central banks see strategic importance in AI and are actively experimenting on data retrieval and analyses, the Bank of International Settlements said in a report in April. [2025]