The Bank of England (BoE) has been strongly criticised for failing to predict the surge in inflation. Had it done so, it could have reacted more quickly and prevented inflation from rising as high as 11% in autumn 2022.
The bank acknowledges this failing and has asked former Federal Reserve chairman Ben Bernanke to lead a review of its forecasting models for both inflation and GDP growth.
I’ve been doing my own analysis of the BoE’s record by comparing how it has performed relative to other forecasting models. This demonstrates the scale of the bank’s failing – and it turns out to have been compounded by a second error that may have made the situation worse.
