Citi Says Europe Could Also Face Central Bank Independence Risk

Central bank independence could come under threat in Europe over the coming years, should an ongoing move toward issuing shorter-dated bonds tempt politicians to push for lower interest rates, according to Citigroup Inc.

Monetary policy is already under pressure in the US from the Trump administration’s repeated demands for lower rates, and recently, the Justice Department’s threat to slap criminal charges against the Federal Reserve. For the European Central Bank and the Bank of England, a similar dynamic could emerge, stemming from changes in governments’ borrowing strategies, Citi strategists Jamie Searle and Aman Bansal told clients.