The ECB has promised to keep interest rates low for an “extended period of time”. In a broad hint to the profession, President Draghi stressed a reasonable forecast of this period could be extracted from a monetary policy reaction function. This column presents one such forecast based on published macro forecasts and a reaction function that fits the ECB’s past behaviour. The result is that ECB interest rates will rise by May 2014 at the latest.
Tilman Bletzinger, Volker Wieland, Thursday, September 5, 2013
Eswar Prasad, Karim Foda, Monday, April 23, 2012
The world economy is showing scattered signs of improvement but remains fragile according to official forecasts. This column summarises the latest update of the Brookings Institution-FT Tracking Indices for the Global Economic Recovery. It confirms some positive signs but also much to worry about as the world economy continues to meander with no clear sense of direction.
Antonello D’Agostino, Paolo Surico, Monday, April 18, 2011
What does inflation predictability reveal about the conduct of monetary policy? This column examines the ability of money growth and output growth to forecast inflation across a century of US data. It uncovers a robust link between the nature of the monetary regimes and the ability to predict inflation several quarters ahead.
Thomas J. Sargent, Martin Ellison, Tuesday, November 24, 2009
The Federal Reserve Open Market Committee has been criticised for making forecasts that are inferior to Federal Reserve staff forecasts. This column argues that FOMC forecasts are worst-case scenarios used to inform policy decisions, rather than best estimates of future events. It says that FOMC forecasts are a rational response to doubts about the staff’s model.
Domenico Giannone, Lucrezia Reichlin, Saverio Simonelli, Monday, November 23, 2009
The UK’s early estimate of GDP growth for the third quarter of 2009 still shows negative growth with a reading of -0.4%. This column combines the quarterly releases of GDP with timely survey data to form a “now-cast” of quarterly GDP growth. It says that the UK has likely exited the recession already, estimating positive growth of 0.15%.