Central bank independence

Updated: Aug 20, 2021

Independence of the central bank from immediate short-run control of its aims and operations by the government. This includes independence in personnel issues, such as appointments of board members, and in the choice and control of instruments that affect inflation. Because central banks typically operate on a longer timescale than politicians, an independent central bank is expected to be better for monetary stability since governments can sometimes be tempted into inflationary policies, for example by boosting spending and employment or cutting interest rates to gain popularity in the short run.

Reference: Oxford Press Dictonary of Economics, 5th edt.

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James Knight
Editor of Education
James is the Editor of Education for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets.... read more.