The Bank of England has appointed the US architect of money printing during the financial crisis to lead an official review into its forecasting failures.
Ben Bernanke, a former chairman of the Federal Reserve, has been appointed in the wake of repeated failures by the Bank to spot the persistence of UK inflation.
Mr Bernanke has been asked by David Roberts, chairman of the Bank’s court, to examine its economic predictions “during times of significant uncertainty”.
He will start the unpaid role this summer and report back to the Bank next year.
Inflation peaked at 11.1pc last October and is still at 7.9pc, almost four-times the Bank’s 2pc target.
Mr Bernanke chaired the Federal Reserve from 2006 to 2014, leading the rich world’s response to the financial crisis.
This included using QE as a mainstream central banking policy in much of the world for the first time.
Mr Bernanke said: “Forecasts are an important tool for central banks to assess the economic outlook. But it is right to review the design and use of forecasts and their role in policymaking, in light of major economic shocks. So I am delighted to be leading this work for the Bank.”
Mr Bailey said: “Dr Bernanke is a renowned and award winning economist whose distinguished career makes him the ideal person to lead this review.
“The UK economy has faced a series of unprecedented and unpredictable shocks. The review will allow us to take a step back and reflect on where our processes need to adapt to a world in which we increasingly face significant uncertainty.”
Parliamentarians have been particularly fierce critics of the Bank’s performance.
Harriett Baldwin, chairman of the Treasury Committee of MPs, welcomed the appointment. She said: “The sooner the Bank is able to learn the lessons of the recent past the better.”
A report from the House of Lords’ Economic Affairs Committee, which includes Lord King, a former Governor of the Bank, called QE “a dangerous addiction”, warning in 2021, before the recent spike in prices, that “if the Bank does not respond to the inflation threat sufficiently early, it may be substantially more difficult to curb later”.