Can the RBA see itself in its crystal ball?

The Reserve Bank of Australia’s main economic forecast and analysis units – key drivers of official interest rate decisions – are bracing for the outcome of a closely held review of the central bank’s forecasting practices.

…Conducted by two of the world’s leading experts in economic modelling – former Reserve Bank board member Adrian Pagan and David Wilcox, head of research and statistics at the US Federal Reserve – the work is understood to have raised concerns that Reserve Bank forecasters put too much store in “gut feel” judgments over hard models.