Bank of England economic forecasting is being held back by “seriously out of date” software, said a former chairman of the US Federal Reserve.
Ben Bernanke led the Fed from 2006 to 2014. He was tasked with conducting an independent review into the central bank’s operations after it failed to predict or prevent inflation between 2022 and 2023.
His report, published April 12, said: “Key software is out of date and lacks important functionality,” adding that “model outputs do not always flow automatically to where they are needed for forecast construction but must often be transferred manually, a laborious and inefficient process.”
“Deficiencies are frustrating to staff”
“The Bank staff rely heavily on a large commercial database, which contains several million data series… However, the [bank’s] software for loading data to and accessing data from the database is seriously out of date and difficult to use,” the report notes, urging sustained investment.
Even simple data operations or data visualisation were a struggle at the central bank, Bernanke said, with basic steps like “searching for and extracting a particular data series or creating graphs or figures are often not well supported, instead requiring auxiliary programs and several additional steps. These deficiencies are frustrating to staff, complicate the forecast process, and limit the scope for supplementary analyses.”
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The BoE has not previously put enough resources into “ensuring that the software and models underlying the forecast are adequately maintained.”
In his recommendations, Bernanke suggested the central bank “might consider whether adding a few data specialists to work with economists in accessing and working with data, especially larger and more complex data sets, would make the forecasting process work more smoothly.”
The BoE said in its response, published the same day, that it “welcomes and is committed to action on all 12 of the Review’s recommendations.”
It added that in early 2023 it had begun a “Future Platform” programme to manage the move to a new product for working with data.
“This is part of a wider data portfolio that will provide the Bank with a new environment for working with data on the cloud [and] not only address limitations of the existing infrastructure but also enable staff more easily to automate processes, as well as to work with the increasingly large and complex data sets” the BoE added “it will explore the extent to which further expansion of these activities is required.”
