What's happened
The Bank of England faces criticism over its economic forecasting methods following a review by former Federal Reserve Chair Ben Bernanke, highlighting significant shortcomings in the Bank's forecasting infrastructure due to out-of-date software. Bank of England Governor Andrew Bailey has pledged to implement all 12 recommendations from the review to enhance forecasting accuracy.
Why it matters
The review of the Bank of England's economic forecasting methods is crucial as it highlights the need for modernization and improvement in forecasting infrastructure. Implementing the recommendations could lead to more accurate economic predictions, positively impacting policy decisions and the overall stability of the British economy.
What the papers say
The Independent emphasizes the need for changes in the Bank of England's forecasting methods, citing significant shortcomings found in the review. In contrast, Politico focuses on the Bank's response to the review, highlighting Governor Andrew Bailey's commitment to implementing all recommendations to enhance forecasting accuracy.
How we got here
The Bank of England commissioned a review by Ben Bernanke to assess its economic forecasting methods following criticism of inaccurate predictions during periods of economic volatility. The review identified deficiencies in the Bank's forecasting infrastructure, particularly outdated software, leading to a commitment from Governor Andrew Bailey to address these issues.
Common question
More on these topics
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A bank is a financial institution that accepts deposits from the public and creates a demand deposit, while simultaneously making loans. Lending activities can be performed either directly or indirectly through capital markets.
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The Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based.
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Andrew John Bailey is a British central banker who has been Governor of the Bank of England since 16 March 2020.
Previously he served as the Chief Cashier of the Bank of England from January 2004 until April 2011, Deputy Governor of the Bank of England fr