# A volatility model developed by JP Morgan

I am quite confused with this predicting volatility equation:

σ2t = βσ2t-1 + (1-β)ε2t

Here is a section from Capital Market Expectations: CFA Level 3 Volume 3 Curriculum (page 27)

https://ibb.co/37Z2M8r

If we have the residual error (Actual Value - Predicted Value) at time t, that means we already have known the actual variance at time t. Then why do we still need to forecast the volatility at time t anyway?