www.bloomberg.com
In its inaugural forecast evaluation, the Bank of England admitted it consistently underestimated inflationary persistence following the 2022 energy shock. The central bank attributed this error to an overestimation of “cacophony effects”—the theoretical dampening impact of economic uncertainty—and an underestimation of how firms would prioritize protecting profit margins over market share during the crisis. Consequently, the Bank’s models predicted a faster decline in inflation than what materialized, leading to persistent price pressures in the UK economy.
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