The Bank of England has agreed to improve its forecasting record after its shortcomings were highlighted last year by three external reviews.
Inflation has exceeded the bank’s 2 percent target for most of the past five years. The bank will also publish numerical details about the judgements underpinning its economic forecasts.
The forecasting record was reviewed by former Federal Reserve official David Stockton. He focused on measures to avoid the “inertia” and “group think” to which regular forecasting exercises are typically prone.
The central bank is minded to take forward almost all of the 71 proposals contained in the reviews, which were not only limited to its forecasting but also to its liquidity provision.
The bank agreed to publish more alternative scenarios, and to take a systematic look, when forecasts proved wide of the mark, as to the reasons why. Progress on all these measures should be made in August.