© Reuters. FILE PHOTO: The Federal Reserve building on Constitution Avenue is photographed in Washington
WASHINGTON (Reuters) – European Central Bank President Mario Draghi on Saturday expressed his concern over the independence of the US Federal Reserve, warning that a loss of its autonomy could undermine the credibility of its policy.
The appointment by US President Donald Trump of two controversial candidates to the Fed's board of directors and his persistent calls for rate cuts have sparked the specter of government interference, challenging a fundamental tenet of modern central bank.
"I'm certainly worried about the central bank's independence in other countries, particularly … in the world's largest jurisdiction," Draghi said of the United States.
"If the central bank is not independent, then people may well think that monetary policy decisions follow political advice rather than objectively assessing the economic outlook," he said at a meeting today. A press conference.
Turkey's governments in the United States and India have been putting increasing pressure on their central banks in recent months, sparking a debate over the value of independence.
But some argue that unconventional politics, widely used now, redistributes wealth. Monetary policy therefore takes more and more political decisions and therefore requires greater political control.
"Under their mandate, however, central banks should be free to choose the best way to fulfill this mandate," said Draghi. "Because if you do not let them be free, they're not responsible." It's been the central bank's framework since the 1980s everywhere. "
Nevertheless, Draghi argued that he saw no similar threat to the independence of the ECB given the legal safeguards and that he also did not think that cases of "bad debt" or "money laundering". interference in another country would undermine global confidence.
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