We therefore see different types of forecasting strategies in the markets. For example, many traders have time horizons of a few minutes. To them tomorrow is very long term. Those needing short-term forecasts will probably use chartist or bottom-up spreadsheet techniques. These models have little basis in economic theory, and are unlikely to perform well over longer-term horizons.
Our structural models in the Bank, for example, use quarterly data, so by definition they cannot be used for predicting one month ahead. For this we would use autoregressive integrated moving average (ARIMA) models, which are also momentum-type models with no underlying economic theory.