IMF chief urges countries to bolster central bank independence
The IMF chief urged countries on Thursday to "maintain and reinforce" central bank independence to ensure price stability and foster long-term economic growth. In recent years, many nations have granted central banks greater autonomy, empowering them to combat inflation and stabilize prices.
In a blog post published Thursday, Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), highlighted that these measures have been instrumental in the recent success of many countries in tackling post-pandemic inflation surges worldwide.
Georgieva emphasized the significance of central bank independence for price stability, stressing its crucial role in ensuring consistent long-term growth.
She pointed out that financial stability benefits the entire economy and mitigates the risk of central banks hesitating to raise interest rates due to fears of triggering a financial crisis.
Drawing a comparison between the post-Covid-19 era and the inflationary period of the 1970s, Georgieva highlighted the detrimental effects of a lack of central bank independence. She argued that political pressure during that time often led to actions undermining price stability.
Georgieva underscored the importance of central banks and governments fulfilling their respective roles, citing improved inflation control, enhanced growth and employment outcomes, and reduced financial stability risks as evidence.
Given the high stakes involved, she stressed the necessity of preserving and reinforcing central bank independence.
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