1 Owing to these lags, it is widely recognised that monetary policy should be forward-looking and have a medium-term perspective. As a consequence, monetary policy decisions are, to some extent, dependent on forecasts. Future developments in inflation and output are of key interest in central banks’ forecast exercises.
As I mentioned earlier, in order to secure the effectiveness and credibility of monetary policy it is essential that we implement our policies in a timely manner and send consistent policy signals by increasing our accuracy in economic forecasting. We should put greater efforts into improving our economic forecasting models and the procedures for outlook forecasting.