The Role of Artificial Intelligence in Designing Monetary Policy for Economic Growth: A Case Study of the Bank of Canada

The research aims to study the role of machine learning and artificial intelligence in designing monetary policy that drives economic growth, which has become an urgent necessity. With rapid technological advancements, central banks and financial institutions are increasingly relying on AI technologies to analyze big economic data, predict inflation, set interest rates, and evaluate the effectiveness of various monetary tools. The paper discusses how machine learning models can be employed to improve the accuracy of economic predictions, helping decision-makers to adopt more proactive and effective monetary policies. It also reviews the experience of the Bank of Canada through the AI model TOTEM. The research indicates that machine learning can be a powerful tool for improving inflation forecasts and designing monetary policies; however, it should not completely replace traditional economic models. Instead, machine learning can be integrated with the TOTEM model to achieve more accurate and faster predictions.