Fixing forecasting at the Bank of England
NIESR’s Stephen Millard makes the case for three key changes to the BoE’s forecasting
Let’s face it, the Bank of England’s forecasting performance over the past two years has not been good. For example, in August 2021, the forecast for inflation in the fourth quarter of 2022 was 2.5%; the outturn was 10.7%.
Of course, no-one in August 2021 could have predicted the Russian invasion of Ukraine in February 2022 and the effect it would have on inflation in 2022 and 2023. But it could be argued that the bank continuing to underpredict inflation in 2022, and underweighting the risks of
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