Bank of England ranks poorly in economic forecasting, report finds

Wednesday 17th April 2024 07:08 EDT

A recent report highlights significant shortcomings in the Bank of England's ability to make accurate economic predictions. 

The institution relies on outdated IT systems and maintains an excessive staff count of 5,000. 

Recommendations suggest a shift towards employing fewer, more experienced workers for improved data analysis. 

Consequently, families face the burden of the highest borrowing costs in 15 years, driven by 14 consecutive interest rate hikes.

Ben Bernanke, former US Federal Reserve chairman, was invited to review the Bank after its woefully gloomy and wrong prediction that the UK would face a two-year-long recession.

In his findings, Mr Bernanke observed a significant deterioration in the Bank of England's forecasting accuracy compared to counterparts such as Canada's Norges Bank and New Zealand's central bank. His 86-page report includes 12 recommendations aimed at enhancing the Bank's ability to respond more effectively and swiftly to evolving circumstances.

Mr Bernanke found that vital IT software which the Bank relies on to make its forecasts was “out of date and lacks important functionality”.

Governor Andrew Bailey yesterday refused to apologise for mistakes in forecasting and said the Bank “doesn’t do hindsight”.

He said it was impossible for central banks to predict the huge inflationary shocks from Russia’s invasion of Ukraine.

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