Ex-Fed chair Ben Bernanke finds 'significant shortcomings' in Bank of England's economic forecasting

abcnews.go.com:

A review of the Bank of England’s economic forecasting undertaken by the former chair of the U.S. Federal Reserve has found “significant shortcomings” that should be addressed to better inform future interest rate decisions

LONDON — A review of the Bank of England's economic forecasting that was published Friday and undertaken by Ben Bernanke, the former chair of the U.S. Federal Reserve, has found “significant shortcomings” that should be addressed to better inform future interest rate decisions.

Following widespread criticism about the Bank of England's forecasts, Bernanke was tasked last year to review the forecasting models.

Though noting that all central banks have had problems over the past few years as a result of a series of economic shocks, notably the coronavirus pandemic and the cost-of-living crisis heightened by Russia's invasion of Ukraine, Bernanke said the Bank of England's issues were made worse by out-of-date software that had not been properly maintained.

The review said that “insufficient resources have been devoted to ensuring that the software and models underlying the forecast are adequately maintained."

Bernanke, who led the Fed between 2006 and 2014, a period that included the global financial crisis, made a series of recommendations that the Bank of England said it was committed to fulfilling.

Bank of England Gov. Andrew Bailey said the review was a “once-in-a-generation opportunity” for the central bank to update its models and make them fit for purpose to a ”more uncertain world.”

One recommendation is that the Bank of England start producing its own forecasts of what might happen to interest rates in future, something that could help inform its inflation forecasts.

Over the past couple of