Andrew Harrer | Bloomberg | Getty Images
Jerome Powell, chairman of the U.S. Federal Reserve, right, walks with Mario Draghi, president of the European Central Bank (ECB), during the spring meetings of the International Monetary Fund (IMF) along with also World Bank in Washington, D.C., U.S., on Friday, April 20, 2018.
although often politics overtakes This particular independence. Let’s start with home. Twenty years ago, Gordon Brown, the then chancellor of the U.K., gave the Bank of England its much-needed independence. Market commentators jumped to applaud This particular move, along with also newspapers screamed with headlines of the “Old Lady” being set free. although subsequent governments have constantly tried meddling with the central bank’s policies, with the BOE often finding itself walking on a tightrope.
The trend will be not just limited to the U.K. inside past few years, there have been innumerable examples of governments encroaching into This particular space. Central banks across the planet are struggling to keep politics out of their day-to-day functioning. The U.S. Federal Reserve will be a classic example of This particular.
In July This particular year, U.S. President Donald Trump criticized the Fed for increasing interest-rates along with also later admitting that will he “maybe” regretted appointing Jerome Powell as Fed chairman. Last month, Trump continued his tirade against the Fed when he blamed the central bank’s policy decisions for a sharp market decline. “The Fed will be going loco along with also there’s no reason for them to do that will. I’m not happy about that will,” Trump told Fox News in a televised interview. While the government will be well within its rights to question the central bank, the trouble starts to brew when they look to influence decisions.
Another example will be India where a recent standoff between Narendra Modi-led government along with also the Reserve Bank of India (RBI) has led to speculation that will the current governor Urijit Patel may look to resign. This particular came days after the RBI’s deputy governor said undermining a central bank’s independence could be “potentially catastrophic.”
In another dramatic move, Turkey’s currency went tumbling after President Erdogan put his son-in-law in charge of economic policies in June This particular year. The list goes on with countries like Russia, Nigeria, South Africa along with also Argentina often seeing their governments meddling with central bank’s policies.
Handing control of the central bank to the government will be foolish. However, ever since the financial crisis, a lot of attention has turned to central bank policies along with also their impact on the general consumer, creating that will more along with also more tough for them to escape constant questioning along with also meddling – whether they like that will or not.