##maker may be comfortable with that. but in reality there is no unique answer that encapsulates the collective judgement of the mpc. in the bank ’ s experience, mpc members find it more important to focus on distinguishing between the different broad orders of magnitude of future events, and are less interested in debating whether something will happen 49 times out of 100 or 52 times. one answer to this tension is to describe the problem in words. but that carries its own difficulties. an alternative is to design a graphical device which prevents the illusion of spurious precision. simple graphical changes to the chart such as [ slide 18 ] emphasise that the mpc ’ s view is not best expressed by a precise numerical for the probability. but a downside of this sort of representation is that it does not readily permit comparisons between successive forecasts. instead, a further alternative that the mpc is considering is to present this as a “ probability ribbon ” [ slide 19 ]. this shows a range estimate of the probability that inflation will exceed target, defined by the edges of the relevant band of the fan chart. in doing so it preserves the broad impression of the committee ’ s overall view, yet filters out the artificial accuracy. for instance, the committee thought that the chance that inflation would be 2 % or higher in 2011q1 was between 15 % and 20 %. we can once again use the february forecast to highlight a few of the key messages that the mpc wanted to communicate. in the early part of the forecast period, the probability of inflation being above the target is very high. this is because the data for inflation are well above target at present, and also because the fan chart here is relatively narrow. but the projection for inflation falls over the forecast period. this implies a fall in the probability of inflation being above target. towards the final part of the projection, the probability of inflation being above the target rises back to being broadly one half. this chart emphasises that, in spite of the most likely outcome for inflation being below target, the nature of the distribution of risks implies that the probability of exceeding the target is about one in two. we can also combine the usual top - down fan chart with the information in the cross - sectional densities to produce a 3d fan chart [ slide 20 ]. the particular advantage of this chart is that it shows how the overall density changes over time. for instance, when the distribution is very narrow, such as at the start of the forecast period

, the probability density at the centre of the fan is higher, simply because the mpc is more confident about its central forecast here. overall, however, both from the point of view of how policy is determined, as well as how it is communicated, it is the broad distribution that matters. 8. conclusions self - confidence is infectious. it can also be dangerous. how often have we drawn false comfort from the apparent confidence of a professional advisor promising certain success only to be disappointed by subsequent performance? uncertainty pervades almost all public policy questions. economics and many other disciplines are united by a common need to grapple with complex systems. as the crisis of the autumn of 2008 showed, such systems can sometimes be subject to abrupt changes, the precise timing of which cannot easily be identified in advance. but policy - makers are often expected to anticipate the unpredictable. how can they retain the trust of the public while being open about the true degree of uncertainty? or, to put it another way, what is the appropriate bedside manner for policymakers when dealing with complex uncertain problems in a public debate? we have explained how the bank of england tries to deal with some of those challenges in the context of monetary policy. we are sure we have much to learn, and our efforts to improve communication will continue for a long time to come. references anderson, r and may, r ( 1991 ), “ infectious diseases of humans : dynamics and control. ” oxford university press. arrow, k ( 1995 ), interview with “ the region ” magazine, available http : / / www. minneapolisfed. org / publications _ papers / pub _ display. cfm? id = 3675. at asch, s e ( 1951 ), “ effects of group pressure upon the modification and distortion of judgment ”. in guetzkow, h ( ed. ) “ groups, leadership and men ” pittsburgh, pa : carnegie press. banerjee, a ( 1992 ), “ a simple model of herd behaviour. ” quarterly journal of economics, 107 ( 3 ), 797 – 817. bar - eli, m, azer, o, ritov, i, keidar - levin, y, schein, g ( 2007 ) “ action bias among elite soccer goalkeepers : the case of penalty kicks ”, journal of economic psychology, vol 28 no 5, pp 606 – 621. bikhchandani, s. hirshleifer, d. and