BoE review highlights weaknesses in forecasting ability

Weaknesses in the Bank of England's forecasting process have been highlighted in a review by an ex-Federal Reserve official.

David Stockton described the Monetary Policy Committee's forecasts for growth and inflation as "too optimistic" and said the "serial persistence" of the errors needed fuller analysis. He criticised the MPC for a lack of systematic, quantitative analysis to interrogate its forecast errors, Bloomberg reports. Stockton has also recommended 21 options to improve the forecasting process, including encouraging more assertive staff, challenging the central bank's "house view" and incorporating financial stability risks into its forecasts. Stockton emphasised the latter point be high on the a...