the first quarter of this year and the most recently published forecasts by public institutions, the risks to this outlook remain broadly balanced. on the downside, there are concerns that the turmoil in financial markets could have a stronger impact on the real economy, as well as that protectionist pressures could intensify and that there could be adverse developments in the world economy stemming from a disorderly correction of global imbalances. at the same time, there may be stronger than anticipated positive effects due to the decrease in commodity prices and to the policy measures taken. annual hicp inflation was, according to eurostat ’ s flash estimate, 0. 6 % in april, unchanged from march. as explained on earlier occasions, the decline in inflation since last summer primarily reflects the sharp fall in global commodity prices over this period. moreover, signs of a more broad - based reduction in inflationary pressure are increasingly emerging. looking ahead, base effects stemming from past energy price movements will play a significant role in the shorter - term dynamics of the hicp. accordingly, we expect to see headline annual inflation rates declining further and temporarily remaining at negative levels for some months around mid - year. thereafter, annual inflation rates are expected to increase again. such short - term dynamics are, however, not relevant from a monetary policy perspective. looking further ahead, hicp inflation is likely to remain positive and below 2 % in 2010, with price developments being dampened by ongoing sluggish demand in the euro area and elsewhere. available indicators of inflation expectations over the medium to longer term remain firmly anchored in line with the governing council ’ s aim of keeping inflation rates at levels below, but close to, 2 % over the medium term. the risks surrounding this outlook are broadly balanced. they relate in particular to the risks to the outlook for economic activity as well as to risks to commodity prices. turning to the monetary analysis, the latest data confirm the continued deceleration in the pace of underlying monetary expansion. this is signalled, for instance, by the concurrent further declines in the annual growth rates of m3 to 5. 1 % and of loans to the private sector to 3. 2 %. the deceleration supports the assessment of diminishing inflationary pressures in the medium term. month - on - month developments in m3 and its components have remained volatile, with data for march showing a contraction in most of the respective outstanding amounts. this may partly reflect market participants ’ investment responses to the past reduction in the key ec

on source data with limited history, even if in the age of big data, these data sets are broad in scope. expectations for banks recognizing that ai presents promise and pitfalls, as a banking regulator, the federal reserve is committed to supporting banks ’ efforts to develop and use ai responsibly to promote a safe, fair, and transparent financial services marketplace. as regulators, we are also exploring and understanding the use of ai and machine learning for supervisory purposes, and therefore, we too need to understand the different forms of explainability tools that are available and their implications. to ensure that society benefits from the application of ai to financial services, we must understand the potential benefits and risks, and make clear our expectations for how the risks can be managed effectively by banks. regulators must provide appropriate expectations and adjust those expectations as the use of ai in financial services and our understanding of its potential and risks evolve. 20 the federal reserve ’ s model risk management guidance ( sr 11 - 7 ) establishes an expectation that models used in banking are conceptually sound or “ fit for purpose. ” sr 11 - 7 instructs that when evaluating a model, supervised institutions should consider the “ [ t ] he design, theory, and logic underlying the model. ” the model risk management guidance discusses in detail the tools banks rely on to help establish the soundness of their models, such as back - testing and benchmarking and other outcomes - based tests. to that end, we are exploring whether additional supervisory clarity is needed to facilitate responsible adoption of ai. it is important that we hear from a wide range of stakeholders — including financial services firms, technology companies, consumer advocates, civil rights groups, merchants and other businesses, and the public. the federal reserve has been working with the other banking agencies on a possible interagency request for information on the risk management of ai applications in financial services. today ’ s symposium serves to introduce a period of seeking input and hearing feedback from a range of external stakeholders on this topic. it is appropriate to be starting with the academic community that has played a central role in developing and scrutinizing ai technologies. i look forward to hearing our distinguished speakers ’ insights on how banks and regulators should think about the opportunities and challenges posed by ai.