In defense of central bankers

Martin Wolf of the Financial Times wrote about the necessary independence that needs to come with central bankers.

Here’s an excerpt:

Turbulent times produce turbulent central bankers and turbulence over central banking. The question, particularly in the UK, where central bank independence is so fragile, politics so tumultuous and times so tough, is how central bankers should act. My view is: with caution, but not under a vow of silence.

He gave more attention to the situation in the UK where the Bank of England seem to be losing the power to speak up.  When the dividing line between fiscal and monetary policy is blurring, there is the danger of the central bankers independence to be compromised.  With no more monetary policy ammunition left, the government is left with fiscal policy which they have more control over.  Two choices: spending and taxes.

If a country is in a position whereby its deficits are ballooning from overspending, the central banker should be able to speak up. As the one at the forefront of macroeconomic issues, he should also have a say as to how a country should proceed in solving the macroeconomic problems.

Read the entire piece HERE.


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