THE DAILY TELEGRAPH: The Bank of England has been accused by a leading economist of using "smoke and mirrors" to present its official forecasts for inflation.
With the annual rate of price rises currently double the official target at 4pc, the Bank's central projection that the rate should return to 2pc next year is under considerable debate.
However, Simon Ward, Henderson's chief economist, thinks the Bank is deflecting attention away from a far more worrying presentation of how fast it thinks prices will rise in the future.
"Inflation-targeting has become meaningless," he said. "The opacity of the forecasting process and scope for creative interpretation of the remit and presentational manipulation imply that there is no effective constraint on the Monetary Policy Committee's [MPC] 'discretion'."
His argument is that the Bank's most recent quarterly forecasts show its mean forecast – the mathematical average of its projections – is for inflation of 2.48pc two years ahead, if interest rates do not rise. » | Emma Rowley | Sunday, April 24, 2011
