Central Bank Independence May Not Survive the Coronavirus
The post-pandemic era of monetary policy will likely be very different. Whether that’s a good thing is anyone’s guess.
All together now.
Photographer: Saul Loeb/AFP
As the coronavirus pandemic continues, Bloomberg Opinion will be running a series of features by our columnists that consider the long-term consequences of the crisis. This column is part of a package on monetary policy. For more, see Mohamed El-Erian on what central banks should do next, Dan Moss on Asia’s growing influence and Ferdinando Giugliano on Europe’s last chance at reform.
The coronavirus crisis is quite likely to void the contract under which the U.S. Federal Reserve and the world’s other main central banks have operated for decades. As the full costs of the pandemic emerge, the main idea in this contract — that central banking can and should stay politically neutral — might have to be abandoned.