Indications that the Trump Administration is considering nominating Moore and Cain to the Board of Governors of the Federal Reserve has stirred up an international controversy over its independence of central banks. Cain withdrew his name from consideration yesterday, though the mere floating of his name had generated much consternation. Although President Trump has appointed the majority of the Board, including choosing Powell as Chair, and they have not been controversial, he has used his bully pulpit to criticize the conduct of monetary policy repeatedly. Even the usually circumspect ECB President Draghi felt it necessary to express his concern.
Given the importance, let’s unpack this concept of central bank independence. There seem to be four elements to consider,Read More »