economic forecast

Chris Giles

The question seems absurd. John Rentoul of the Sunday Independent would be tempted to add it immediately to his list of journalistic questions to which the answer is “no”. I think the answer is obviously “no”.

But the Treasury and the Information Commissioner believe anyone revealing details of the Bank of England’s forecasts is doing something that is:

“likely to have a destabilising effect on the financial markets and thus have a prejudicial effect on the economic interests of all or part of the UK”.

Hence, in the eyes of government, Mr Carney, who revealed details of the BoE forecasts on Wednesday, is something of a traitor. At least that was the view of the Treasury last year. Read more >>

Chris Giles

UPDATE 13:45

Mr Bean was indeed describing the forecast accurately. As far as I can tell from judicious use of my ruler, the Bank’s risk-adjusted forecast (the mean of the forecast distribution) is for growth of 1.3 per cent in 2010, 3 per cent in 2011 and 2.9 per cent in 2012. In November, the equivalent figures were 1.5 per cent, 3.1 per cent and 2.6 per cent.

So the Bank has brought its central most-likely forecast closer into line with outside forecasters. Predicting a boom always seems rather odd. But it has not revised down its view of the average growth forecast much. The mean forecast is, of course, purely an MPC judgement about the variance and the skew of the forecast having taken the mode forecast from the Banks models.

It suggests the MPC has a similar outlook for economic growth and inflation than it had in November based on the assumption that interest rates stay lower for longer.

Again the Bank is a bit like a reverse Toyota. It’s got it foot slammed even harder on the accelerator pedal, but the link between its action and growth has broken down. Read more >>