Bank of Tanzania (BoT) Governor Emmanuel Tutuba, joined fellow central bank governors for the 46th annual meeting of the Association of African Central Bank (AACB) in Mauritius where they discussed ways to address various challenges facing central banks with the emerging technological advancements. The theme of the September 3 to 4, 2024 meeting was “Use of Big Data Analytics Technology, Central Bank Interest Rates, and Artificial Intelligence in Combating Inflation.”
Speaking during one of the panel discussions at the meeting, Governor Tutuba underscored the importance of big data analytics and artificial intelligence in conducting analyses and making policy decisions.
The big data analytics and artificial intelligence, Mr. Tutuba said, were particularly suitable where the monetary policy framework in practice was that of use of policy rate (central bank rate), currently popular in many countries, due to their capability to forecast inflation and various economic indicators. Governor Tutuba chaired the discussion on “The Benefits and Challenges of Using Big Data Analytics and Artificial Intelligence in Forecasting Inflation and Implementing Monetary Policy.” Despite their merits, Governor Tutuba urged central banks “to use these technologies carefully to avoid potential harms associated with the accuracy of the relevant data.”
Other topics discussed during the meeting were on The use of central bank interest rates in addressing inflation and their impact on the stability of the financial sector, and Advancements in financial service technologies and how artificial intelligence can be utilized to combat inflation.During the meeting, central bank governors from across Africa exchanged ideas on advancements in big data analytics technology and how it is revolutionizing the monitoring of various economic indicators and enabling accurate and timely policy decisions.
Additionally, they discussed how artificial intelligence can enhance the accuracy of inflation forecasts and projections, thereby enabling policymakers to make precise and timely decisions, as well as challenges associated with the use of such technology.
Presence of multiple data sources, both official and unofficial, including the increasing use of social media for information dissemination, made accuracy of the data obtained a challenge. Thus, they underscored the need to be careful in utilization of the relevant data in decision-making.
The leaders also highlighted another challenge, namely, the high costs associated with installing systems necessary for conducting the required analyses. Despite the challenges outlined, the heads of central banks in Afrika concurred that benefits of using the emerging technologies, including artificial intelligence were numerous, making it essential for central banks across Africa to begin planning and investing in the adoption of this technology.
Earlier, the Prime Minister of Mauritius, Mr. Pravind Kumar Jugnauth, called on central bank governors across Africa to collaborate in leading their institutions to ensure they operate efficiently and keep pace with the ongoing technological advancements.
Bank of Tanzania (BoT)