Gamblers take on central bank forecasts

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Sick of the "experts" getting their economic forecasts wrong? Members of the public are being encouraged to take on the Bank of England by betting on the U.K.'s future inflation and unemployment rates.

Free-market think tank the Adam Smith Institute on Wednesday launched two betting markets in an attempt to use the "wisdom of crowds" to beat the Bank of England's official forecasters. Punters can place bets on what the rate of both U.K. inflation and unemployment will be on June 1, 2015.

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Among the odds offered by bookmaker Paddy Power are 7/1 that the rate of inflation (CPI) will be 2 percent or less, and 7/2 that it will hit 5 percent or higher. When it comes to the unemployment rate, it is 9/2 that it will be 5 percent or less, and 5/1 that the rate will be 8 percent or greater.

The Bank of England currently expects inflation to slow to close to its 2 percent target by 2015, and does not expect the rate of unemployment to fall to 7 percent until 2016. Official data out earlier this month revealed that CPI inflation fell to 2.8 percent in July, while unemployment remained steady at 7.8 percent.

The Adam Smith Institute argued that official economists have repeatedly got these forecasts wrong. By contrast, bookmaker odds are often more reliable than expert opinions – on everything from sports to the Eurovision Song Contest - because they eliminate individual biases.

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Sam Bowman, the think tank's research director, said the betting markets should "out-predict" the Bank of England's experts because they combine the local knowledge of lots of different people.

"If these markets catch on, the government should consider outsourcing all of its forecasts to prediction markets instead of expert forecasters," he said.

Paddy Power's Rory Scott added: "Mr Carney – forget your fancy financial models; let's see where the great British public put their pound instead."

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The Bank of England declined to comment on the launch, which comes on a big day for Governor Carney who made his first major speech to business people in Nottingham, U.K.

By CNBC's Katrina Bishop. Follow her on Twitter @KatrinaBishop