Bernanke Advises The Bank Of England To Revise Its Economic Forecasting Model

Nobel laureate and former chairman of the US Federal Reserve Ben Bernanke believes that the Bank of England must radically rewrite its basic economic forecasting model in order to minimize errors.

In the summer of 2023, the British regulator hired Bernanke to do an evaluation of forecasting techniques, and the team led by Bernanke published a report summarizing the findings.

The economist claims that there are serious problems with the Bank of England’s existing basic economic model.

Furthermore, the report recommended that the British central bank discontinue the publication of « outdated » charts that project inflation and GDP growth for several scenarios.

The Central Bank is advised to employ « more qualitative (as opposed to quantitative) descriptions of risks and uncertainty ».

The paper also mentions how outdated software makes it difficult to swiftly construct alternate scenarios.

The British Central Bank stated that it will provide a report on possible reforms before the end of the year and that it is prepared to implement all of the recommendations included in the study.

source: ft.com

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