Central Banks Strike Back
Institutions in several countries resist political pressure. But for how long?
Turkey’s central bank defied President Erdogan.
Photographer: Kula/Anadolu Agency/Getty Images
After significant political pressures, central banks mounted a multifaceted, though uncoordinated, counteroffensive last week. But their pushback could prove to be just a brief interruption to a political phenomenon that could even gain further momentum, especially if higher and more inclusive growth outcomes continue to elude so many countries.
Central bank policies are under political attack in both emerging and advanced countries. Governments, including in Russia and Turkey, seem to have become more outspoken about how these monetary institutions should implement their policies. In the U.S., the Federal Reserve’s interest rate hikes have been criticized by President Donald Trump. And in Europe, ECB President Mario Draghi and his colleagues on the Governing Council are continuously defending the bank’s large-scale purchases of securities and its maintenance of negative interest rates.