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Many Happy Returns
Is The Bank of England Broken?
Apr 17, 2024
The podcast discusses the Bank of England's failure to predict high inflation and the need for a major overhaul in forecasting methods. They also explore the challenges faced in economic forecasting, the importance of human judgment, and the impact of geopolitical events. Additionally, the podcast delves into quantitative tightening and its impact on monetary policy, debt auctions, central bank independence, and the uncertainty surrounding Quantitative Tightening and inflation impact.
39:35
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Quick takeaways
- Criticism of Bank of England's forecasting process prompts calls for overhaul and improved communication.
- Understanding quantitative tightening and its implications on asset prices, market liquidity, and economic stability.
Deep dives
Bank of England's Forecasting Review
The Bank of England's forecasting process faces criticism in a new review, prompting discussions on the efficacy of its forecasting methods. The review, led by Ben Bernanke, highlighted the challenges in predicting inflation spikes post-pandemic. Despite staff diligence, resource constraints hinder accurate forecasting, leading to missed projections in inflation, GDP, and unemployment. Comparisons with other central banks suggest the Bank of England's performance falls mid-range, with calls for improved forecast communication.
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Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode