Bank of England Governor Mervyn King
says interest rates should be so predictable that investors view
policy-making as ``boring.'' On the evidence of economists'
forecasts for 2007, the world's central bankers may fail his
test.
A year ago, economists were almost unanimous in predicting
U.S., Japanese and European rates would go up in 2006 -- and they
were right. This time, some of them will be seriously wrong,
reflecting the likelihood of a far more volatile global economy
where the risks of inflation on the one hand and slowing growth
on the other are more evenly balanced.
``Maybe things aren't going to be so boring after all, and
there are reasons why you should worry that they could be
dicier,'' John Lipsky, first deputy managing director of the
International Monetary Fund, said in a Dec. 21 interview.
Goldman Sachs Group Inc. expects Federal Reserve Chairman
Ben S. Bernanke and his colleagues to cut the Fed's benchmark
rate to 4.5 percent; Barclays Plc foresees a rise to 6 percent.
ABN Amro Holding NV says European Central Bank President Jean-
Claude Trichet and ECB policy makers will lift their main rate
twice, to 4 percent, while Deutsche Bank AG says the ECB will cut
by year's end. Estimates for the Bank of Japan and King's own
Bank of England are similarly split.
``We've not seen this kind of divergence for quite some
time,'' says Avinash Persaud, chairman of London-based financial
consultant Intelligence Capital Ltd.
