Our analysis generally suggests that our forecasting track record is somewhat better than the average of other forecasters.2 But what is also clear is that all forecasters face difficulties in predicting future economic outcomes beyond the next few quarters. Quite simply, much can happen over that timeframe. The central projection in our Monetary Policy Statement therefore represents just one path of the many possible.
Monetary policy and trade-offs Even if we knew the future perfectly, we would face important choices about how quickly and strongly to react to economic pressures and to seek to restore future inflation to target. These choices have impacts on the economic volatility during the adjustment period. The PTA recognises this trade-off.