BUDAPEST (Reuters) – The independence of central banks is being questioned in some parts of the world, which could erode their ability to control inflation, European Central Bank President Christine Lagarde said on Monday.
“Recent studies suggest that the de jure independence of central banks has never been more important than today, but there is no doubt that the de facto independence of central banks is being questioned in many parts of the world”, underlined the head of monetary policy during a conference of the Hungarian central bank.
However, persistent political interference increases the volatility of exchange rates and increases bond yields and risk premia, which would prevent independent central banks from fulfilling their mandate, warned Christine Lagarde.
This would further undermine social consensus and further amplify economic volatility, the leader summarized.
U.S. President Donald Trump said last week he would demand the Federal Reserve lower its key interest rates, saying he knows monetary policy far better than officials at the central bank.
(Report by Balazs Koranyi, Corentin Chappron, edited by Sophie Louet)
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