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Opinion
Richard Barwell and Anthony Yates

The Bank of England Could Use Some New Fans

Using fan charts to communicate a range of probabilities would reduce uncertainty.
Some charts might help.

Some charts might help.

Central bankers devote a huge amount of time and resources to communicating with markets, companies and the public. So why do the Bank of England's communications still end up confusing markets and distorting decisions in the real economy?

The BOE's latest inflation report marked a new low on the communication front. The bank explains how the outlook for interest rates has changed by comparing two invisible lines: a forecast for rates that the bank hasn't published, and the forecast the bank didn't publish three months ago. And the communication on how far rates could rise in this hiking cycle is so vague now as to add little value. Investors are left to figure it out for themselves, which leaves financial conditions -- bond yields, equity prices, the value of sterling -- at the mercy of the market's often flawed understanding of what the BOE will do.