The troubles of forecasters

The maximum forecast was of 9.5%, while the minimum was 8.5%

These are trying times for professional forecasters. Events have been moving at such rapid a pace that forecasts become worthless almost as soon as they are made. Take, for example, the Reserve Bank of India’s (RBI) latest survey of professional forecasters done in the second half of September. Asked what they thought the level of the cash reserve ratio (CRR) would be at the end of the December quarter, the median forecast was of 9%. The maximum forecast was of 9.5%, while the minimum was 8.5%.

With effect from 8 November, CRR has been reduced to 5.5%. That’s not all—the median forecast for CRR was 9% at the end of December this year and March 2009, 8.9% at the end of June 2009 and 8.5% at the end of September next year.

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