The review provides a thorough assessment of the bank’s current forecasting approach, and the relationship between the forecast, monetary policy decisions, and their communication.

It identified critical shortcomings in the bank’s operations, particularly in forecasting infrastructure and communication methods.

It sets out 12 recommendations, which are organised according to three major themes.

1. To improve and maintain the bank’s forecasting infrastructure, including data management, software, and economic models;
2. To provide a forecast process that provides more support to the monetary policy committee’s (MPC) decision-making. This includes equipping the MPC and the bank’s staff so they can identify and quantify risks to the outlook, and deal with uncertainty and structural change in the economy.
3. To help the MPC communicate its view of the economy, the risks and uncertainties surrounding its outlook, and its policy rationale, to the public.

The has committed to action on all 12 of the review’s recommendations and will provide an update on proposed changes by the end of the year.

Mr Bernanke said: “The forecasting and policy challenges faced by the Bank of England in recent years were hardly unique.

“Still, they have served as a stress test of forecasting at the bank.

“The bank, like other central banks and policy institutions, will be working to draw the appropriate lessons from this experience. The goal of this review is to assist in this effort.”

Andrew Bailey, governor of the Bank of England, said: “We welcome this important review and its recommendations. This is a once in a generation opportunity to update our approach to forecasting, and ensure it is fit for our more uncertain world.

“We have set out our initial response today, and are committed to taking action on all of Dr Bernanke’s recommendations.”

David Roberts, chair of Court, said: “It is crucial that the bank continuously learns and adapts as an organisation. I would like to thank Dr Bernanke for leading this thorough, independent, and objective review into the processes which underpin the MPC’s policy decisions.”