The Bank of England will be using sentiment from social networks and the net in general to help make decisions on when to move upwards or downwards with interest rates, and other matters.
Naturally, the Bank uses a lot of data to help make these decisions, but much of that is official statistics, which are somewhat out of date when they’re utilised.
Big data drawn from social networks and search engines could provide a much timelier and accurate picture of what is actually happening in, say, the job market or housing market. The frequency of people performing online job searches, for example, could be a very useful barometer for the current picture of employment in the UK.
A new team has been set up by the Bank's chief economist, Andy Haldane, to monitor online sources for such data, or in his words, to “scrape the web”.
Haldane told Sky News (opens in new tab): “We have a new advanced analytics team who are constructing little models, algorithms and methods for extracting this data. We have a data lab. This is quite a big strategic change for the bank.”
The Bank of England has already been using a large database on UK mortgages to gauge the strength of the housing market, and doubtless this will be used to decide when interest rates finally need to be moved upwards from the 0.5 per cent rate they’ve stayed at since the spring of 2009.