There aren't many sure things in economics, as you might have noticed from all the fudging and fence-sitting economists indulge in. But here's one economic forecasts are utterly worthless.
No one not the International Monetary Fund, not Goldman Sachs, and certainly not the Bank of England can predict the future with any level of consistency or accuracy. And no one expects them to be able to either.
No one keeps a score sheet or holds forecasters to account we all know that they have as much validity as a fairground fortune teller, so why bother? Of course, that raises the question what's the point of forecasts? And the answer is not to predict the future, but to justify the actions you take today.
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Estate agents find statistics that'll tell you that prices are going to rise so that you'll buy a house now. Fund managers will dig back to tell you that the FTSE 100 will be roughly 7% higher in a year's time every year so that you'll buy stocks.
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And Bank of England governor Mark Carney latches on to whatever statistic he can find that will enable him to justify keeping interest rates right where they are until after the next election.
The unreliable boyfriend', as one MP nicknamed him, has declared that "now is not the time for a rate increase", despite falling unemployment, rising growth and growing market expectations that rates might even rise in 2014.
Carney's excuse this time is weak wage growth, but the truth is that he'd have found some other reason to dodge the bullet if wages hadn't provided the excuse.
If you think I'm just being cynical, here's a quick reminder last August, the Bank still reckoned that the unemployment rate would remain above 7% well into 2016. This week it was down to 6.4%. Why should forecasts for stagnant wages be any more accurate?
History shows that central bankers almost always err on the side of loose monetary policy when it comes to the economy, and Carney won't be any different. So what does it all mean for your investments?
The pound took the news hard, as currency traders start to realise that Carney is looking for reasons not to hike rates. But that'll be good news for British stocks that are exposed to the US dollar which is a lot of them.
I'm feeling particularly well-disposed towards the mining sector at the moment, because Carney isn't the only central banker who looks reluctant to hike rates. Janet Yellen in the US is in a similar position.
If as seems likely they are both willing to tolerate much higher inflation than we've all been used to in the past 20-odd years, then having exposure to the commodity sector looks wise. And keep hold of the 5%-10% weighting to physical gold in your portfolio. It's good insurance against all sorts of nasty surprises, but particularly inflationary ones.
