The Globe and Mail reports in its Saturday, Dec. 15, edition that Bank of Canada Governor Stephen Poloz should count his blessings because he gets to do his job in relative peace and obscurity compared with the politically fraught environment facing some of his fellow central bankers in other countries.
The Globe's Barrie McKenna writes that from India to Turkey, the independence of central banks is under assault. After dropping rates to near zero, many central banks are still struggling to reverse engineer the process, and get inflation back up to their targets. With rates still low, they are at risk of being powerless when the next recession hits.
University of Chicago economist and former head of the Reserve Bank of India says: "There is a trend [of populism] across countries where politicians think they are empowered by the people and therefore have a mandate to do whatever they want. As a result, the institutions that constrain them are up for questioning."
Being independent of government means central banks can take away the punch bowl when the party gets too lively -- even when doing so may be unpopular.
Central banks maintain credibility by being outside of the political arena.
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