I was pleased to contribute to a recent article in The Banker which looked at the current period of heightened scrutiny around central bank independence and particularly how recent attacks on the Federal Reserve have left bankers in an “impossible” position.
The issue right now is not necessarily about personalities but rather about an institutional question with far-reaching implications. As has been evident for many years, central bank independence is a key foundation of market credibility. When confidence in that independence is weakened the effects surface through inflationary expectations, higher risk premia and, ultimately, the cost of capital.
Public restraint from leading banks, asset managers and other regulated institutions is sometimes misinterpreted as indifference. In fact, it reflects the challenge of operating in highly regulated and politically exposed environments where institutional neutrality is a core aspect of stewardship.
What stood out most in the article was the reference to the collective response from central bankers. That highly uncommon demonstration of solidarity was about reaffirming rules-based monetary policy and institutional continuity. Critically, for markets, these signals matter.
At a time when short-term pressures dominate headlines, the strength of independent institutions remains one of the most important pillars of financial stability. Preserving that independence is not just a political matter. It is essential to the effective functioning of the whole global financial system.
http:// https://lnkd.in/gzmxRTgp
#centralbanks #monetarypolicy #financialstability #institutionalintegrity #markets