Mark Carney, the new Bank of England governor, today gave his first major speech since taking office at Threadneedle Street.

Addressing representatives of the CBI East Midlands, Derbyshire and Nottinghamshire Chamber of Commerce and the East Midlands Institute of Directors, the Canadian-born governor reaffirmed his commitment to ‘forward guidance’ – a policy which only a few weeks ago confirmed that interest rates would be kept at the historically low level of 0.5 per cent until unemployment levels fall below 7 per cent (which is unlikely to happen any time before 2016). 

This speech comes as many in the City believe that rates will go up faster than the official BoE forecast, mainly due to the upward revisions of growth predictions.  The markets are, clearly, not convinced by Carney’s thinking and expect a rise sooner rather than later.

Interestingly, today, on the day that the Governor defended his predictions in Nottinghamshire, there was a challenge launched to the traditional way inflation and unemployment forecasts are determined.

Collaborating with bookmakers Paddy Power, the Adam Smith Institute, the think tank, has introduced two public betting markets.  In effect, the Great British Public are being asked for their predictions for how high or low inflation and unemployment levels will be in two years’ time.  Currently, it is seven-to-one that the Bank of England is undershooting its inflation target for June 2015.

With the institutions – namely the Office for Budget Responsibility, the BoE, and commercial banks – often criticised for failing to produce accurate macroeconomic data, perhaps this open, wider forum could be the way forward to generate such important forecasts?

It is, certainly, another broader tool that can be used – and the public does have a proven track record of prediction successes – they are, for example, almost always more accurate at predicting results of major sporting events than the pundits!

To my mind, the input of thousands of private individuals – most of whom, as investors, will have a vested interest in this issue – should be able to out-forecast a small, elite panel of ‘expert forecasters.’

As such, the markets will no longer be exclusively reliant on the BoE’s predictions and, in my opinion, that can only be a good thing as no one single institution, however good the intentions and however well resourced, will ever be able to make totally accurate predictions, so the more we have the better.

See how forward guidance affects expat pensioners and savers here.