Forecasting and Forecast Narratives: The Bank of England Inflation Reports
We analyze the narratives that accompany the numerical forecasts in the Bank of England's Inflation Reports. We focus on whether the narratives contain useful information about the future course of key macro variables over and above the point predictions, in terms of whether the narratives can be used to enhance the accuracy of the numerical forecasts. We also consider whether the narratives are able to predict future changes in the numerical forecasts. We find that sentiment related to speci?c aspects of the economic outlook (say, demand conditions, or supply conditions)
can enhance point forecast performance, and changes in sentiment (expressed in the narrratives) can predict subsequent changes in the point forecasts.
Keywords: Sentiment indices, inflation forecasting, output growth, forecast encompassing.
Next Steps
Published on | 29 November 2016 |
---|---|
Authors | Professor Michael ClementsJ. James Reade |
Series Reference | ICM-2016-10 |
This site uses cookies to improve your user experience. By using this site you agree to these cookies being set. You can read more about what cookies we use here. If you do not wish to accept cookies from this site please either disable cookies or refrain from using the site.