SIMON LAMBERT: Could an artificial intelligence bot that beat the best at poker do a better job than the Bank of England on interest rates?

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Today is Super Thursday, the day when the Bank of England delivers the double whammy of an interest rate decision and inflation report.

You could be forgiven for not getting too excited about this.

Beyond the small matter of a post-Brexit vote interest rate cut, Super Thursday has turned out to be not particularly super since the first one arrived in 2015.

On all but that one occasion, nothing much has happened. Not much is expected today either.

Mark Carney and the Bank of England deliver the latest on interest rates and inflation today

Instead we should see more of the same: rates on hold, the Bank willing to look through pound-based inflation fluctuations, and some gentle grilling of Mark Carney, who will pull off the rare trick of being both smooth and slightly tetchy.

Ultimately, with rate-setting there is no right answer – just different points of view - and we’ll never know if the Bank’s actions are actually working.

But a long way from the Bank of England’s decision-making chambers, something  happened this week that might point the way forward for setting interest rates.

An artificial intelligence bot won a marathon 20-day long poker game against four of the world’s best players, amassing almost $1.8million in chips.

The computer program named Libratus, developed at Carnegie Mellon University, was playing Heads Up No-Limit Texas Hold’em poker against four professional players - and among its notable achievements was successfully bluffing the humans.

So what does that have to do with setting interest rates?

The link is that the poker win at the US city of Pittsburgh’s Rivers Casino, was considered significant because the game involves coming up with strategies using imperfect information.

Professor of computer science Tuomas Sandholm said: 'The best AI's ability to do strategic reasoning with imperfect information has now surpassed that of the best humans.'

You've got to know when to hold 'em... Would an artificial intelligence bot that can beat the best at poker be better at setting rates with imperfect information than the Bank of England 

One of the important parts of the research involved analysing the day’s games and improving the computer’s own weaknesses each night, rather than trying to come up with ways to exploit the opponents.

‘The bot gets better and better every day,’ one of the poker players Jimmy Chou said. ‘It’s like a tougher version of us.’

Professor Sandholm explained that the technology could be used in situations where information is incomplete and misinformation can be given, including business negotiations, military strategy, cybersecurity, and planning medical treatment.

These are times when digesting existing information, forecasting what might happen in the future, and using intuition become important.

And that sounds a lot like setting interest rates.

It would be fascinating to know what that AI system could learn from analysing our interest rate history, and the decisions it would make based on the same imperfect information that Bank deals in.

Perhaps one day not so far in the future we will find that an artificially intelligent bot could do a better job in setting interest rates than the Bank of England’s monetary policy committee. 

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