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Central banks fear they might not rule the world forever
All Around the World, Central Bank Independence Is Under Threat
Anirban Nag, Rene Vollgraaff, and Walter Brandimarte
Thursday, December 6, 2018
South Africa's top monetary policy maker spoke for his peers around the world last week when he declared that threats to central-bank independence from politicians are no longer just an "emerging-market phenomenon."
The U.S. Federal Reserve, Bank of England, and European Central Bank are feeling the heat from elected lawmakers, while India and Turkey are among others under pressure.
"There's concern among the central-banking community that the independence of central banks could be under threat," South African Reserve Bank Governor Lesetja Kganyago said.
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The threat could have real economic consequences: A study in the 1990s by economists Alberto Alesina and Lawrence Summers concluded that independent central banks were better at controlling inflation without damaging output or employment.
Financial markets risk being unnerved if investors suspect central banks will bow to lobbying and take their eye off inflation. That could push up long-term interest rates. Conversely, officials might feel the need to stamp their authority by raising short-term borrowing costs higher than they would otherwise.
Here's a rundown of the monetary institutions getting unwanted attention from politicians. ...
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