Former US Federal Reserve Chairman Ben Bernanke Highlights Shortcomings
A recent report has criticized the Bank of England, labeling it as one of the world's worst at making economic forecasts. Former US Federal Reserve Chairman Ben Bernanke highlighted significant shortcomings in the Bank's forecasting abilities, pointing out that it has deteriorated significantly.
Outdated IT Systems and Staffing Issues
The report pointed out that the Bank of England has too many staff, with 5,000 employees, and recommended employing fewer but more experienced workers for more accurate predictions. Additionally, the Bank relies on outdated IT systems that lack important functionality.
High Borrowing Costs for Families
As a consequence of the Bank's inaccurate forecasts, families have faced the highest borrowing costs in 15 years due to 14 consecutive interest rate rises. This has had a direct impact on the financial well-being of households.
Recommendations for Improvement
Ben Bernanke made 12 recommendations in an 86-page report to help the Bank of England react better and faster to changing economic circumstances. Improving IT systems and staffing were among the key areas identified for enhancement.
Governor Andrew Bailey Defends Bank's Performance
Despite the criticism, Governor Andrew Bailey refused to apologize for the mistakes in forecasting, stating that the Bank "doesn’t do hindsight." He also highlighted the challenges of predicting unforeseen events such as the inflationary shocks resulting from Russia's invasion of Ukraine.
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