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The Harvey files 3: bad forecasts

By Harvey Cole  

How good are the forecasters? 45 leading banks and other financial institutions ended 2007 having all failed to make an accurate guess at the 3.1 per cent by which GDP rose during the year. (The nearest was the treasury—thanks to its bracket figure of 2.75 to 3 per cent). All the others were too low. Similarly, not a single one forecast that the bank rate would end the year at 5.5 per cent. Although in mid-year many were predicting 5.75 or even 6 per cent, only one pencilled in a rate of more than 5.25 per cent back in January.

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