ECB’s Draghi worried about Fed’s independence

0
79
© Reuters. FILE PHOTO: The Federal Reserve Board building on Constitution Avenue is pictured in Washington© Reuters. FILE PHOTO: The Board building on Constitution Avenue is pictured in Washington

WASHINGTON (Reuters) – President Mario Draghi expressed concern on Saturday about the U.S. Federal Reserve’s independence, warning that a loss of its autonomy could undermine the credibility of policy.

U.S. President Donald Trump’s nomination of two controversial candidates to the Fed’s board and persistent calls for rate cuts has raised the specter of government interference, challenging a fundamental tenet of modern central banking.

“I’m certainly worried about central bank independence in other countries, especially… in the most important jurisdiction in the world,” Draghi said about the .

“If the central bank is not independent, then people may well think that monetary policy decisions follow political advice rather than objective assessment of the economic outlook,” he told a news conference.

Article continues below Advertisement...

Governments from to and the United States have put increasing pressure on their central banks in recent months, igniting a debate about the value of independence.

But some argue that unconventional policy, used widely now, redistributes wealth, so monetary policy makes increasingly political decisions and thus requires increased political scrutiny.

“Within (their) mandate, however, central banks ought to be left free to choose what’s the best way to comply with the mandate,” Draghi said. “Because if you don’t let them be free, then they’re not accountable. That’s the central banking framework since the 80s everywhere.”

Still, Draghi argued that he saw no similar threat to the ECB’s independence given the legal safeguards and he also did not think that cases of interference elsewhere were undermining global confidence.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source: Investing.com