MNI BRIEF: BOE To Formally Review Its Forecasting Processes​

The Bank of England has decided to undertake a review of its forecasting processing, the head of the Court of Directors said in a letter to the Treasury Select Committee Wednesday, with the cross-party group of legislators also requesting that it do so.

The Court -- the central bank's overall governing body -- said, in response to a letter this week from the TSC, that it had discussed back at its May meeting learning the lessons of recent events and forecasting at a time of high uncertainty. The BOE's central projections failed to predict the extent or persistence of the rise in inflation and it has been publishing a large upward skew to its inflation, based on judgement and alternative analysis, to better reflect its views on inflation. (See MNI POLICY: BOE Hikes Whilst Seeking New Inflation Model).

David Roberts, the Court's head said that he and Governor Andrew Bailey were working on how best to commission the review and decide on its terms of reference and that it would be supported by the Independent Evaluation Office, with the process set to be transparent.