The Bank of England (BoE) has recently taken major steps to boost transparency, strengthen global financial standards, and improve its economic forecasting methods.
These moves show the central bank’s commitment to building trust, ensuring stability, and increasing accuracy amid a complex economic environment.
In a recent letter, BoE Governor Andrew Bailey responded to Richard Tice, a prominent political figure who questioned whether the bank’s focus on diversity could affect merit-based decisions. Bailey stressed that the diversity efforts aim to widen the talent pool without lowering standards.
He pointed to data showing better representation of women and ethnic minorities in senior roles. In 2024, women held 45% of executive positions, up from 38% in 2020. Ethnic minorities filled 12% of leadership roles, compared to 8% four years earlier.
Bailey argued that having diverse perspectives improves decision-making and cited research linking inclusive teams to stronger risk management. The letter highlighted the BoE’s dedication to transparency while defending its balance of merit and inclusion.
On the global front, the BoE reaffirmed its commitment to the FX Global Code in June 2025. This code, created in 2017, sets principles for fairness, transparency, and accountability in foreign exchange trading.
By renewing its pledge, the BoE reinforced its role in the $7.5 trillion daily FX market. London accounted for 38% of global FX trading in 2024, according to the Bank for International Settlements.
The bank emphasized ongoing efforts to ensure staff and partners follow the code, including mandatory training and regular audits. This move comes as market conduct faces increased scrutiny, especially with challenges from digital assets and decentralized finance.
By upholding these standards, the BoE aims to keep London’s reputation as a trusted financial center.
In economic forecasting, the BoE released a macro-technical paper in June 2025 titled “Nowcasting GDP at the Bank of England: A Staggered Combination MIDAS Approach.” This paper presents a new way to estimate GDP in real time, tackling delays in economic data reporting.
The Mixed Data Sampling (MIDAS) method combines high-frequency indicators like retail sales and industrial output with quarterly GDP figures to deliver faster estimates.
Tests showed this approach cut nowcasting errors by 15% compared to older models between 2018 and 2024. This improvement helps the BoE react more quickly to economic changes, important after the UK’s GDP shrank by 0.3% in April 2025 following a strong first quarter.
Another technical paper from June 2025, “Decompositions, Forecasts, and Scenarios from an Estimated DSGE Model for the UK Economy,” adds to the BoE’s forecasting tools.
Dynamic Stochastic General Equilibrium (DSGE) models blend microeconomic behaviors with macroeconomic forecasts. The updated model includes post-Brexit trade changes and energy price shocks, improving inflation forecast accuracy by 10% over 2020-2024.
It also introduces scenario analysis to evaluate risks, such as potential US tariffs under former President Trump’s policies, which could reduce UK GDP by 0.5% by 2026 if tariffs rise.
Together, these updates show the BoE’s broad approach to managing economic challenges. By addressing public concerns, sticking to global standards, and refining forecasting models, the bank aims to maintain stability and credibility in an uncertain world.
