Research and Studies

Home > Research and Studies > Bank of Japan Working Paper Series, Review Series, and Research Laboratory Series > Bank of Japan Review Series 2008 > The Uncertainty of the Economic Outlook and Central Banks' Communications

The Uncertainty of the Economic Outlook and Central Banks' Communications

June 2008
Monetary Affairs Department
Koji Nakamura and Shinichiro Nagae

Click on rev08e01.pdf to download the full text.

Central Banks make policy decisions based on their outlook for economic activity and prices. They pay attention not only to central projections, but also to the projection uncertainty and the balance of risks. Central banks place importance on evaluations of the uncertainty and the balance of risks in their communications. They use various methods suitable to each bank's situation, such as the Bank of Japan's "Risk Balance Chart" published this April. When evaluating the uncertainty of economic projections, the historical forecast error is one reference. The real GDP growth and CPI inflation forecast errors for one year ahead are large in each economy, at about one percent for real GDP growth and 0.5 percent to one percent for CPI inflation.


Bank of Japan Review is published by the Bank of Japan to explain recent economic and financial topics for a wide range of readers. This report, 2008-E-1, is a translation of the original Japanese issue, 2008-J-3, published in June 2008. The views expressed in the Review are those of the authors and do not necessarily represent those of the Bank of Japan.

If you have comments or questions, please contact Koji Nakamura, Senior Economist, Monetary Affairs Department (E-mail :