The Science and Art of Communicating Fan Chart Uncertainty: The case of Inflation Outcome in Sierra Leone

The use of macro-econometric modelling technique has become a norm for policy decisions in central banks and particular, the Bank Sierra Leone. This study leveraged on technicalities scientific artistic approaches assessing risks around point / baseline forecast; this general makes it more convincing probability confidence bands to be used explaining uncertainty that surround forecast particular. In case study, Box-Jenkins ARIMAX model made possible highlight relevance Composite Leading Indicator (CLI) like Exchange Rate alerting signals about early turning inflation outcome, both terms surrounding its projections. With derived (scientific) distribution (30%, 60% 90%), was outcome unearth vast amount information from Inflation Fan Chart, particularly with respect art providing balanced assessment framework needed communicate BSL’s price stability objective. While Chart is hailed as very relevant tool, paper also recommend other Scenario Sensitivity analysis, considered leading evidence balancing macroeconomic outlook.