NextFin news, Researchers from George Washington University recreated the Federal Open Market Committee (FOMC) meeting held in July 2025 using artificial intelligence agents modeled on real Federal Reserve policymakers. The simulation took place recently and was conducted virtually, replicating the decision-making process of the Federal Reserve board in Washington, D.C.
The AI agents were programmed with the historical positions, biographies, and public speeches of actual Federal Reserve members. They processed current economic data and financial news to make interest rate decisions as the real board would.
The study found that when political pressure was introduced into the simulation, the AI agents representing board members became polarized, resulting in an increased number of dissenting opinions during the meeting. This demonstrated that political influences can sway Federal Reserve decisions despite the institution's formal rules designed to ensure independence.
According to the study, "This simulation shows that the Federal Reserve is only partially insulated from politics, and external factors can influence internal decisions, even in an institution operating under formal rules." The research was led by academics Sophia Kazinnik and Tara Sinclair.
While central banks, including the Federal Reserve, are cautious about entrusting monetary policy decisions directly to AI, many are employing AI technologies to enhance research and operational efficiency. For example, the Federal Reserve has used generative AI models to analyze FOMC meeting minutes, the European Central Bank applies machine learning to forecast inflation, the Bank of Japan uses AI for economic analysis, and the Reserve Bank of Australia tests AI tools for policy briefing preparation.
Michelle Bullock, head of the Reserve Bank of Australia, emphasized, "We do not use artificial intelligence to formulate or set monetary or other policies. Instead, we aim to leverage it to enhance efficiency and strengthen staff contributions in areas such as research and analysis." The Bank for International Settlements has also highlighted AI's growing strategic role in central banking, stressing the importance of governance and reliable data.
The AI simulation study was reported on Thursday, September 11, 2025, by Reuters and covered by multiple news outlets including ForkLog and News.az. It provides new insights into how political dynamics may affect Federal Reserve policymaking, even in a controlled, AI-driven environment.
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