Bank of England to scrap outdated inflation forecasting model in major overhaul after Fed boss’ review

Key Facts

The review — initiated after criticism of the central bank’s policymaking amid spiraling inflation — sets out 12 recommendations which BOE Governor Andrew Bailey said the bank was committed to implementing.
The fan chart — which shows a range of possible future data points — has long been used by the bank to present the probability distribution that forms the basis of its inflation forecasts.
He also noted that the BOE currently relies more heavily on a central forecast than do other central banks, and said that its analysis should be supplemented with a wider range of alternative scenarios that “help the public better understand the reasons for the policy choice.”
The review also said that the bank should move ahead with the current modernization of the software it uses to manage and manipulate data as a “high priority.”