Global shocks and wage growth led bank to underestimate inflation persistence
A new “forecast evaluation report” sheds light on the causes of the Bank of England’s forecast errors since the post-pandemic inflation surge.
The report by the BoE highlights how higher energy prices and global export prices contributed to it underestimating how severe the inflation surge would be. After inflation peaked, a failure to fully model second-round effects such as wage increases led to further errors.
BoE chief economist Huw Pill says in the report’s introduction that there is “much to
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