Ex-US bank head to review Bank of England forecasts
- Published
Ben Bernanke, the former head of the US central bank, is to lead a review of the Bank of England's forecasting.
The appointment comes as the Bank faces criticism for its efforts to control soaring prices and failure to predict their surge.
The Bank once forecast that inflation would peak at 6%. It actually hit 11.1% last year and remains high at 7.9%.
Bank Governor Andrew Bailey said the review would allow the institution to "step back and reflect".
"The UK economy has faced a series of unprecedented and unpredictable shocks," he said announcing Dr Bernanke's role.
"The review will allow us to take a step back and reflect on where our processes need to adapt to a world in which we increasingly face significant uncertainty."
Dr Bernanke, who steered the US economy through the 2008 financial crisis while at the helm of the Federal Reserve from 2006-2014, said he was "delighted" to have been given the role.
"Forecasts are an important tool for central banks to assess the economic outlook," he said.
"But it is right to review the design and use of forecasts and their role in policymaking, in light of major economic shocks."
The Bank is due to meet next week to decide whether to raise interest rates for a fourteenth time.
Markets and economists expect the Bank to increase its main rate by a quarter of a percentage point, to 5.25%, which will be the highest rate since 2008.
The moves are aimed at stabilising prices, which have soared in recent years due to a mix of factors, including the war in Ukraine, which disrupted global oil and food markets.
The pressures have proven far more persistent than the Bank initially anticipated.
In December 2021, when it started to raise rates, it said it expected inflation to peak at about 6% in April 2022.
The current rate remains higher than 2% rate targeted by the Bank, even after fuel prices fell last month.
In May, Mr Bailey said there were "very big lessons" to learn about how the central bank had dealt with the economic shocks of recent times.
He said the bank's internal forecasting failures had led it to look elsewhere for help setting policy.
Dr Bernanke, who was awarded the Nobel memorial prize in economics in 2022, will be assisted by the Bank's internal review unit.
Their work is due to start this summer but not before the Bank's next interest rate decision which is due on Wednesday. He is expected to report back next spring.