 Box B: Communicating UncertaintyNational Institute of Economic and Social Research () National Institute Economic Outlook, 2026, issue Winter, 24-28 Abstract: Economic forecasts play a crucial role in shaping public debate and guiding important decisions ‐ from interest rate policies to government budgets and business planning. Yet these forecasts are produced in a world filled with uncertainty. Unexpected events such as Brexit, the Covid‐19 pandemic, and geopolitical shocks regularly disrupt economic trends. This box explores how forecasters can best communicate the uncertainty around their predictions. Fan charts ‐ such as figure 10 ‐ are visual tools that show a central forecast surrounded by shaded bands representing a range of possible outcomes. The darker areas indicate results seen as more likely;; lighter areas show those seen as less likely. While widely used, especially by central banks like the Bank of England, fan charts have recently come under criticism—most notably from former US Federal Reserve Chair Ben Bernanke ‐ who argues that they are poorly understood, hard to interpret, and based on questionable methods. Here, we argue that they can still be valuable, but only if designed and used thoughtfully, with clearer links to real‐world measures of uncertainty and realistic judgements about risks. Date: 2026 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:nsr:niesre:i:wintery:2026p:24-28 Access Statistics for this article More articles in National Institute Economic Outlook from National Institute of Economic and Social Research 2 Dean Trench Street Smith Square London SW1P 3HE. Contact information at EDIRC. |
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