The Old Lady needs a new forecasting method

The arbitrary nature of the Bank of England's forward guidance is doing it no favours. It would do well to learn from the Fed, which draws upon a range of expectations in its decision-making.

Carney’s cross. The Old Lady of Threadneedle Street has got her knickers in a twist. Though the Bank of England has been known as the Old Lady since the 1790s, she remains attracted to new tricks. The most recent of them, the brainchild of  the Bank’s new governor Mark Carney, was meant to increase clarity, but it has only caused confusion. The principal cause of the problem has been the unreliability of economic forecasts and the people who interpret them.

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