HOW WELL DO ANALYSTS FORECAST INTEREST-RATES

This paper examines interest rate forecasts made for the period 1982-9 0 and examines three issues: (1) Is there a general agreement among an alysts about the level of interest rates six months in the future? (2) Are all the forecasters equally good? (3) Are the forecasts valuable to prospective users? We use distributions of the cross-sections of fo recasts, Friedman's statistic for analysis of variance by rank, and te sts of independence between forecasts and outcomes to examine these qu estions. We conclude that there usually was a consensus among analysts , that there was no significant difference in the ability to forecast short-term rates but there was a difference with respect to the long-t erm predictions, and that these forecasts were not significantly bette r than random walk forecasts.