We should all have a vested interest in how successful the Bank of England is in carrying out its objectives. Sadly, the Bank’s track record in recent years has left much to be desired, both in its ability to meet those objectives and its inability to communicate the thinking behind its decisions. Thus, the release today of Dr Ben Bernanke’s review of forecasting at the Bank is of prime importance.

Despite the Bank’s Governor, Andrew Bailey, calling it a ‘once in a generation’ review, the scale of the criticism and of the overhauls Bernanke proposes mean that it should not be seen as the last, or a one-off, but hopefully one in a series of reviews and reflections on the Bank’s performance. Criticism of the Bank has all too often been seen as an attack on its independence and integrity when it is not – and certainly should not be – but rather, in this case, is a challenge to its credibility and competence.

First, there is a damning indictment of how the Bank is run. Bernanke doesn’t pull any punches. The ‘most serious problems’, the review states, are ‘deficiencies of the Bank’s forecasting infrastructure’. Indeed, it is a tad ironic, given how often the Bank highlights the lack of investment in the UK economy, that the review describes a deep lack of investment in its own forecasting infrastructure.

A number of years ago, I highlighted the fact that one could read the Bank’s reports and not see ‘money’ or monetary indicators mentioned. One does not have to be a monetarist to appreciate that monetary and financial indicators need to be part of any policymaking dashboard. They have not been at the Bank. This has been one factor in its many mistakes.

One recommendation outlines steps to take, notably, ‘rich and institutionally realistic representations of the monetary transmission mechanism’. Given that the world’s second largest financial centre is on its doorstep, one might expect the Bank to be better on top of monetary and financial flows and transmission.