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Bank Strategist Backs Statistics Reform
Rachel Lomax, the Bank of England's Deputy Governor for Monetary Policy, has raised questions about the business and economic data available to UK government, referring to the 'statistical fog surrounding the true state of the economy' and backing a report calling for fundamental changes.
In a speech to the North Wales Business Club which forms part of the MPC's regular programme of regional visits, Lomax argued that there is encouraging evidence that the new monetary policy framework is 'doing its bit to ensure continued economic stability', but says that 'successful monetary policy depends on having good information... The statistical fog surrounding the true state of the economy has proved a particularly potent breeding ground for policy errors in the past'. Lomax added that 'Improving the quality of national statistics... may be the best single way of ensuring that the MPC responds effectively to challenging times ahead'.
Any implied criticism of the ONS was qualified by recognition of its quality and central importance. Bank and ONS staff are working together on an ambitious modernisation programme, according to Lomax, who said the Office was the most accurate source of information on economic activity. However, the time the ONS takes to produce reliable estimates means that private sector surveys can add value, as proven in recent work by the Bank.
Lomax welcomed the conclusions of the recent Allsopp report, which called for fundamental changes to the way key economic data are compiled, but stressed that while 'improving the quality of macroeconomic data is a first order issue for monetary policymakers ... it is just as important for the ONS to maintain the quality of its current output during this period of major transition'.
The full text of the speech is available as a PDF at www.bankofengland.co.uk/speeches/speech232.pdf
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