Fed’s Jefferson says AI is rushing traders’ reactions to central bankers’ messages

(Reuters) – Synthetic intelligence is rushing the speed at which traders react to particular sentences in central bankers’ speeches and in statements describing their coverage actions, Federal Reserve Vice Chair Philip Jefferson stated on Friday, however it’s unclear whether or not that elevated pace is boosting or hindering the efficient transmission of financial coverage.

“For now, I don’t suppose synthetic intelligence is altering the way in which policymakers talk, however analysis reveals that it has affected how rapidly details about coverage is included into asset costs,” Jefferson stated in ready remarks to a convention on the San Francisco Fed that didn’t contact on his outlook for financial coverage or the U.S. financial system.

Additional analysis is required, he stated, to find out whether or not the quicker pace is permitting financial coverage to get transmitted quicker by the financial system, or, as some fear, that it “could present an incentive for traders to worth pace over accuracy, and should scale back the long-run informativeness of asset costs, which may harm the transmission of financial coverage.”

In any occasion, Jefferson stated, analysis makes it clear that it is not simply traders but in addition households that concentrate and reply to financial coverage pronouncements. Policymakers, he stated, “ought to talk as clearly as potential to keep away from rising uncertainty.”

(Reporting by Ann Saphir; Modifying by Paul Simao)