The need to pay attention to the possible damage from upside slippage is re-inforced by the observation that, as far as forecasting goes, the MPC is all too human. Groen, Kapetanios and Price (2009) carried out a careful assessment of the Inflation Report forecasts, for the period from Bank of England independence in 1997Q3 up to 2006Q2. They found that the Inflation Report forecast of inflation out-performed nearly all of the range of alternative, purely statistical, models that they examined at one quarter, four quarter and eight quarter horizons. Such a finding is comforting but does not, nevertheless,.
