Mary Daly

The models that we have can produce an estimate from negative 3 to positive 11.

What does that tell you?

The neutral rate of interest is not a truth with a capital T. It's an estimate.

It's a theoretical construct to help us understand how to benchmark policy, but you can't use it as a

threshold that you can do surgical adjustments around.

No one calibrates monetary policy surgically with a neutral rate of interest estimate for those reasons.

So where we are using AI though at the Fed, and many people may be surprised about that, would you like to learn about that?

Yes, please, how?

I know many might think I work in an institution that waits for, we're still getting electricity.

You might think that, but no.

We actually are not the earliest adopters, because remember, we're fiduciary stewards of public funds, but also as fiduciary stewards of public trust.

And so we really have to make sure that we're working in the most risk-free and risk-managed environment we possibly can.

But we have been at this since really in 2023.

So the first thing that we did as a system, and I'll really speak about the 12 Federal Reserve Banks that are across the country, we worked as a system to say, well, we need to make sure our employees, our teams, are ready to understand AI.

So what do we need to do?

We need to have lessons, work gatherings, et cetera, get people familiar and get people focused in areas that we can practice with.

So we built a practice environment.

that was completely ring-fenced and not in production.

It's just a practice environment, trying it out.

And of course, we got what most businesses got.