surprisingly low – have been about as common as demand shocks. how consequential are these forecast errors for the actual setting of monetary policy? to a large extent, that is the acid test. the answer to that question is dependent on whether the forecast misses ex ante ex post were foreseeable and. it also depends on what the monetary policy response has been between when the forecast was made and when the outcome is actually realised. as i noted earlier, one challenging dynamic in forecasting the economy is that we are all participants in the process and can have an impact on the actual outcomes with our future actions. how we communicate uncertainty so far i have discussed how we think about forecast uncertainty and some of the approaches we use to make our forecasts as robust as possible. statement on monetary but how do we communicate forecast uncertainty? in the rba's quarterly, our approach is to show graphically confidence intervals around the central forecasts. policy the following graph from the august http : / / www. rba. gov. au / speeches / 2017 / sp - dg - 2017 - 10 - 26. html statement shows this for year - ended gdp growth ( graph 5 ). 12 / 16 27 / 10 / 2017 uncertainty | speeches | rba graph 5 the black line shows actual gdp growth up to the latest data point, and then the central forecast. this is the modal forecast ; the outcome we consider most likely. the dark blue area is the 70 per cent confidence interval around the central forecast, based on our forecasts errors since 1993. roughly speaking, it says that – if we make similar forecast errors to those in the past – there is a 70 per cent chance that gdp growth in two years'time will be between 2 and 4½ per cent. [ 14 ] the light blue area is the 90 per cent confidence interval. these intervals show that there is considerable uncertainty around the forecasts for gdp. this is true for other forecasters, as well as gdp forecasts for other economies. in the statement on monetary policy, we have also published a table of forecasts for key variables. recently these forecasts have been published as ranges, for example, 2 – 3 per cent for inflation. in the next statement, these ranges will be replaced by the central forecasts to the nearest quarter point. anything more precise than that is false precision in my view. this evolution in the approach to portraying the forecasts and the uncertainty around them is because the technology

philipp m hildebrand : monetary policy situation and economic prospects summary of a speech by dr philipp m hildebrand, member of the governing board of the swiss national bank, at the centre for banking studies, lugano, 28 september 2004. the complete speech can be found in french on the swiss national bank ’ s website ( www. snb. ch ). * * * in formulating its medium - term monetary policy, the swiss national bank ( snb ) must take the uncertainty surrounding the development of the economic environment into consideration. the snb believes that the economy is well on the road to recovery, both in switzerland and abroad. for our country, it anticipates real gdp growth of close to 2 % in 2004. sustained growth is also expected for the coming years. consequently, the utilisation of the economy ’ s production capacity will steadily improve, while unemployment will gradually decline. the improved utilisation rate will be accompanied by a rise in inflationary pressure in the medium term. this scenario could be revised, however, if new information were to come to light. the snb will thus continue to monitor economic developments closely and will subsequently draw the necessary monetary policy conclusions.