Stormy forecast: Bank of England has 'very big' lessons to learn as it blames the weather for underestimating inflation
23 May 2023, 15:58
The Bank of England has claimed it has "very big lessons" to learn after it vastly underestimated inflation forecasts, instead pointing the finger of financial blame at the weather.
The words of Bank of England Chief Economist, Huw Pill, follow a slew of criticism from MPs aimed at Governor Andrew Bailey and top executives over inaccurate predictions.
Comments made following a Treasury Committee hearing this morning, Pill noted that issues with calculations meant forecasts had been "too low".
However, Pill said extreme weather also had a role to play, highlighting issues such as vegetable crops failing in Morocco and soaring sugar prices as notable anomalies.
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"These are genuinely things I think you can't predict from period to period," Mr Pill said.
He added: 'We recognise our forecasts on inflation have been too low.'We are trying to understand why we have made those errors, interpret those errors in terms of the behaviour, and make an assessment in terms of how it will continue.'
It follows the Bank of England's dramatically revision of inflation rates, after the Monetary Policy Committee (MPC) announced rates would stay higher for longer than previously expected.
It follows newly released figures on Tuesday morning which show the price of groceries looks set to rise by more than 17 per cent year-on-year.
Conservative MP John Baron today accused the Bank of a "woeful neglect of duty" for failing to bring inflation anywhere near its 2 per cent target.
The current rate stands at 10.1 per cent.
Mr Bailey added that the Bank needed to learn "very big lessons in how we operate monetary policy in the face of very big shocks".
Highlighting the Bank had lost the confidence of the public, Pill also stressed: "We have to make policy in real time. We don't make policy with the benefit of hindsight."
