Former Federal Reserve Chairman Ben Bernanke said the Bank of England's growing interest in publishing its own interest rate forecasts was one of the strongest signals yet that the central bank was considering major communication changes.

“I think there is a lot of interest within the central bank on the subject of ... interest rate forecasting,” Bernanke said at a hearing of the House Finance Committee.

Previously, because the Bank of England had seriously underestimated the inflation level in recent years, Bernanke put forward a series of reform proposals in April.

In his review, Bernanke stopped short of directly urging the Bank of England to follow the Fed in publishing rate forecasts, but he said it was worth exploring, and he later suggested on Wednesday that the proposal was still under consideration even if some policymakers objected.

Bernanke stressed: "This is indeed worthy of study, and I would be disappointed if the Bank of England did not seriously consider this possibility in the next few years." He also said, "I have told the Bank of England that I am happy to continue to provide advice and consultation to the extent that it is useful."

When further questioned at the hearing, he added that the proposal had not yet been formally put forward, but was only mentioned in an email to the incoming deputy governor of the Bank of England, Clare Lombardelli, who welcomed it. Now that the proposal has been made public, he has also mentioned it to the central bank officials, and believes that the officials will be happy to accept his views.

Bernanke also mentioned that if the Bank of England decides to implement interest rate forecasts, he would prefer to adopt the Swedish or Norwegian forecasting model and integrate it into the economic forecast rather than the Fed's dot plot format.

He also stressed that publishing interest rate forecasts is not foolproof, and a major challenge is to enable the nine members of the Monetary Policy Committee to reach a consensus in a timely manner that can be used for forecasting.

Before Bernanke's assessment report was released, some Bank of England rate setters had expressed doubts about the forecast path of interest rate releases, especially in the form of a dot plot.

Bank of England Governor Andrew Bailey expressed reservations about the dot plot, while external rate setter Catherine Mann said the Bank of England did a better job than the Fed in publishing individual votes and following up on speeches and interviews, while another external rate setter Megan Greene warned that investors could misunderstand the original meaning of the dot plot.

Bernanke's assessment report also criticized the Bank of England's "outdated" models and frameworks, and pointed out that the Bank of England was distracted from maintaining its own system because it was busy responding to the crisis and external criticism.

The Bank of England declined to comment but said earlier it would respond to the review later this year.

The article is forwarded from: Jinshi Data