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Economic Commentary

Forecasts and Sunspots: Looking Back for a Better Future

Some would argue that economic forecasts are about as accurate as soothsayers and weather forecasts. Yet central banks all around the world make such forecasts and use them when conducting monetary policy. In fact, countries with inflation targets (Canada, New Zealand, and the United Kingdom, for example) all base their policy actions on inflation forecasts. As Federal Reserve Chairman Alan Greenspan recently commented: “Implicit in any monetary policy action or inaction is an expectation of how the future will unfold, that is, a forecast.”

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Carlstrom, Charles T., and Timothy S. Fuerst. 1999. “Forecasts and Sunspots: Looking Back for a Better Future.” Federal Reserve Bank of Cleveland, Economic Commentary 11/1/1999.