Central banks making banks richer at a loss to tax payers? Monetary independence questioned.
Article's Background World over, the monetary policy independence of central banks has now come under heavy attack. The major reason is their inability to assure the post-pandemic price stability despite the underlying monetary theory. Devastating effects of high interest rates policy adopted during the past two years on both real sector and financial sector have deterred the recovery of global supply chains and bottlenecks caused by the pandemic and subsequent geopolitical issues. As a result, livings standards are eroded while a new global waive of poverty has surfaced. The debt and foreign currency crisis confronted by the developing world has become the new conduit for the geopolitics and poverty. The fact of the matter is the inability of central banks to tame inflationary pressures despite sky rocketed interest rates. In this background, not only independence but also instrument suitability of monetary policy are now being questioned. While the suitability of policy interes