Last month, the Bernanke Review into the forecasting capabilities of the Bank of England was published.
Richard Fuller MP commented:
Bernanke's findings were a gentle rebuke to the poor performance of the Bank of England in forecasting the economy. These lapses have had real impacts on expectations in financial markets and thereby to people’s livelihoods.
It is not all bad news for the Bank but Mr Bernanke, a respected former head of the Federal Reserve Board of the United States, has a slew of recommendations for improvement. I welcome these although I would have preferred a commitment to “dot plots” of future interest rate expectations from each member of the Monetary Policy Committee. I called for this last year.
The Monetary Policy Committee (MPC) sets interest rates that impact people’s mortgages so a clearer idea of their thoughts three months or six months out would be useful.
I noted too the statistics on interest rates as shown in Figure 12 of the Bernanke Review. What this analysis shows, contrary to what the Labour party says, is that UK interests rates have followed all other comparator economies chosen by the respected former head of the US Federal Reserve. To paraphrase, the rise in interest rates in the UK and elsewhere, is not due to the economic priorities of one or other country, it is due to Putin’s invasion of Ukraine and the ending of the “free money” era of quantitative easing.
Richard raised the issue of interest rates during the Finance Bill debate last week saying:
It might be good politics but it is simply not true that UK interest rates have differed from the trends in interest rates in other major European economies.
The Opposition say the former Prime Minister is responsible for higher interest rates. If you look at the data, as the former head of the US Federal Reserve did, then you will see that the Labour Party are plain wrong.
Richard's contribution on this point can be watched at https://youtu.be/enlbU1tR-jE?si=k_hiIpk16ExElkYn
Information on Richard's calls for dot forecasting can be read here: https://www.richardfuller.co.uk/news/richard-asks-shadow-minister-his-view-forecasting-bank-england
