RBNZ’s McDermott backs simple forecasts over fan charts


John McDermott, assistant governor of the Reserve Bank of New Zealand (RBNZ), today extolled the benefits of communicating simple forecasts.

The RBNZ presents its economic projections in the form of a single line – the projected path for interest rates – rather than using a 'fan-chart' model favoured by some other central banks, such as the Bank of England.

"There are obvious risks of oversimplification or inadvertently conveying unrealistic precision in such an approach," he said. "But on the

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