Jerome Powell is Donald Trump’s own chosen one to lead the us central bank. Last spring took over the republikaneren after the popular Janet Yellen. But that doesn’t mean that Powell has been spared Trumps kraftsalver.
like when Yellen ruled, have the Federal Reserve and Powell have been subjected to harsh attacks from the president, on Twitter and in interviews. In the beginning of October was “out of control”, “wild”, “crazy”, “ridiculous” and “crazy” among the president’s descriptions of the central bank.
Now take Powell grep to defend the bank’s reputation and support. The last few weeks has the Fed, as the central bank is often called, announced a series of initiatives to open up and build trust. According to news service Bloomberg, this in addition to the previous claims about the “plain-English”-explanations and a doubling of the number of press conferences.
That makes the central bank a good idea. Even if the president Trumps the outcome, attracts the most attention, there is also a growing suspicion against the central bank’s powers in the us congress. The central bank’s independence is not as guaranteed and of course as it once was.
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It is not only in the US this is evident. At Monday this week selected the head of the indian central bank to take his hat and go. Urjit Patels departure came just weeks after the central sources of the bank shall have expressed unease over prime minister Narendra Modi threaten the central bank’s independence, among other things, push for a more expansive monetary policy ahead of the election next year.
Also in Hungary and Turkey are the independence of the central banks under pressure. And in the united Kingdom, the inflamed Brexit-the battle of course also torn with the central bank’s role in the second.
The clearest examples on interference in central bank independence is all mainly about their own situation. After many years of expansive monetary policy, interest rates now on the rise again. Then it is perhaps no wonder that politicians are concerned that it should go beyond growth, although it is unwise of them to express the concern in challenging terms.
at the same time is also a more refined criticism of the central bank’s power and independence. In may, in connection with the Riksbankens 350-year anniversary, took the Swedish finance minister Magdalena Andersson called for a larger debate about the Swedish central bank’s independence. She pointed out that there may be situations where the fiscal and monetary policy must work together in a way that is not possible under the current regulations.
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another concern who have had more to think out loud about the greater democratic control by the central banks is the impact of the monetary policy potentially has on the distribution of resources in society.
For example, the very expansive monetary policy in the aftermath of the financial crisis led to rising stock and luxury island, property prices, and several have been worried that monetary policy shall contribute to increased inequality.
in humans to a group of economists in the Bank of England points to his side in the direction of that turmoil is excessive. Monetary policy has, according to them had very little effect on the income and formuesulikheten in the Uk since the financial crisis.
Fears despite, central bank independence has first and foremost been a great good, and it would be a huge setbacks for the world’s politicians make it a habit to challenge it, formally and informally.
at the same time the central banks are far from being in the goal to open up about their decision-making processes and rationales. On the contrary, proffered years after the financial crisis, on crisis measures even seasoned observers still do not fully understand.
Such is the powell’s and the us central bank’s response to the president’s obscenities good news, even if the backdrop is challenging. Greater transparency from the world’s central banks will all be served with.
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