Description of Graphs for Speech by Glenn Stevens, Deputy Governor

Graph 1: RBA Survey of Inflation Forecasts

This column graph plots the mean absolute error of the median forecast from the RBA survey of inflation forecasts. The graph shows the mean absolute error increases linearly from 0.23 percentage points at the one-quarter horizon to 1.26 percentage points at the five-quarter horizon. Thereafter there the increase in the mean absolute error is smaller to be 1.42 percentage points at the eight-quarter horizon.

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Graph 2: United States – Year-ended GDP

This chart plots the average forecast of year-ahead US GDP growth from the Survey of Professional Forecasters and the realised GDP growth over the period 1983–2004 as lines. Surrounding the forecast line are two shaded areas: one of which is the inter-quartile range of forecasts, and outside of this is a shaded region showing the full range of forecasts. The graph shows that there is a often a large deviation between actual GDP growth and the average forecast. Indeed the actual outcome is often at the edge of the range of forecasts, or sometimes even outside of the range of forecasts. This is particularly the case in the latter half of the 1990s.

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Graph 3: RBA Forecasts of Underlying Inflation

This line graph plots actual underlying inflation from December 1996 until June 2004. Coming off this line are lines that represent the forecasts from the Statement of Monetary Policy each August. Each of these forecast lines is between 6 and 9 quarters long.

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