What you search for on Google and post on Facebook could soon influence what happens to interest rates.The Bank of England has set up a special taskforce to monitor the internet and social networks for early signs of Britain’s economic ups and downs.
The special team, set up by the Bank’s chief economist, Andy Haldane, has been charged with exploring how new unconventional sources of data could improve its picture of Britain’s recovery.
In an interview with Sky News, Mr Haldane said that the Bank had started to explore using unconventional data, including data gleaned from analysing internet activity, after it found that it could be more timely than the official data.
For instance, analysis of the frequency of internet job searches, or of prices online, can give one an insight into the prospects for unemployment and inflation.
“Official statistics tend to be lagging and tend to be revised. And what this scraping of the web can do is give us a better today read on what’s going on,” he said.
He added that these and other “informal sources” of data “have been somewhat more reliable in picking up the uptick in the fortunes of the economy”.
Mr Haldane told Sky News that the Bank was already using new data sources, including a massive “big data” database on mortgages, which helped them decide to impose their new constraints on the housing market earlier this year.
“Some of those interventions were calibrated by analysing this big database on mortgage borrowing by pretty much everyone in the UK,” he said.
“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.
“This is going to be quite a big shift from the past.”