As I talked about earlier this year, we draw on a wide range of information such as official data, surveys, visits to businesses and labour organisations, external agencies and external monetary policy advisors to form a coherent picture of international and domestic conditions and a macroeconomic projection.10 This information captures our view of the most likely future developments in inflation, output, employment, interest rates, the exchange rate and other key macroeconomic variables.
We also forecast often – every 6 weeks – which ensures we update and correct our view of real economic conditions regularly. Despite all the sophisticated work my colleagues have done to estimate neutral, uncertainty can never be removed and there remains the chance that neutral may have fallen even further than we currently assume.