Monetary policy and uncertainty

Quarterly Bulletin 1999 Q2
Published on 01 June 1999

By Nicoletta Batini, Ben Martin and Chris Salmon of the Bank’s Monetary Assessment and Strategy Division.

Monetary policy-makers take decisions in an uncertain world. This has been long recognised by policy-makers and is reflected in the Inflation Report fan charts, for example, which display the many uncertainties surrounding the inflation and growth projections. But academic studies often assume that policy-makers act as if certain when determining policy. This rests on the notion that policy-makers’ uncertainty about the economy is only of one particular form.

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