Deep Focus: Consequences of European Central Bank forecasting errors

Bruegel senior scholar Zsolt Darvas speaks about his review of systematic errors in ECB forecasting, in another instalment of the Deep Focus podcast on 'The Sound of Economics' channel

In this episode of the Deep Focus, Sean Gibson speaks with Bruegel senior scholar Zsolt Darvas about his research on European Central Bank forecasting.

Zsolt has analysed that, over the past five years, ECB forecasts have proven to be systematically incorrect: core inflation remained broadly stable at 1% despite the stubbornly predicted increase, while the unemployment rate fell faster than predicted.

Such forecast errors, which are also inconsistent with each other, raise serious doubts about the reliability of the ECB’s current forecast of accelerating core inflation, and necessitates a reflection on the inflation aim of the ECB.

You may also be interested in this blog post by Zsolt Darvas, which contains charts illustrating just how erroneous the ECB's forecasting on inflation and unemployment has become in recent times.