Managing Director of the International Monetary Fund or IMF Kristalina Georgieva on Thursday (21/3) appealed to countries to “maintain and strengthen” the independence of central banks to ensure price stability and support long-term economic growth.
In recent decades, many countries around the world have increased the autonomy of central banks, tasking them with fighting inflation and restoring price stability.
These measures have proven critical to many countries' recent success in fighting post-pandemic inflation spikes around the world, Georgieva wrote in a blog post published on Thursday (21/3).
Managing Director of the International Monetary Fund (IMF) Kristalina Georgieva speaks at a press conference, at the World Bank/IMF Spring Meetings at IMF headquarters in Washington, Friday, April 14, 2023. (Photo: AP)
“Central bank independence is important for price stability – and price stability is important for consistent long-term growth,” he said.
“Financial stability benefits the economy as a whole and reduces the risk of central banks being reluctant to raise interest rates for fear of causing a financial crisis,” he added.
Georgieva compared the period since the COVID-19 pandemic to the period of high inflation in the 1970s. He argued that at that time the central bank was not independent so that politicians were often encouraged to take steps that damaged price stability.
“When central banks and governments play their respective roles, we see better inflation control, better growth and employment outcomes, and lower risks to financial stability,” he said.
“With such big stakes, we must maintain and strengthen the independence of the central bank,” he added. (ah/ft)