The International Monetary Fund (IMF) has urged central banks to resist political interferences to achieve their core price stability mandate.
The Director of the IMF’s European Department, Alfred Kammer, said this in a speech at the high-level conference of the National Bank of the Republic of North Macedonia and Reinventing Bretton Woods Committee.
Kammer who spoke on ‘Central Banks and Central Banking in a Highly Complex World: Demonstrating Commitment and Preserving Credibility,’ said central banks are under political pressure.
The director said the new paradigm for conducting monetary policy is built on strong central bank independence from political interference and a clear price stability mandate.
He said, “Inflation targeting also required central bankers to be transparent about how monetary policy decisions were reached and held them accountable for achieving their goals.
“Central bank independence may be the foundation of modern central banking. But transparency and accountability are what balances central bank independence with the principles of democracy.
“Independence has recently come under increasing pressure. We have seen more calls for premature interest rate cuts and more political interference in central bank decision-making and personnel appointments.”
The IMF director added that political pressures on central banks have reemerged, threatening to erode the hard-earned credibility that is essential for maintaining economic stability.
He said, “The road ahead requires both, continuity and adaptation. Existing frameworks need to adapt to navigate new challenges. Yet it is also critical to uphold the core mandates of central banking, balanced by adequate accountability.
“Central bank independence should always remain the foundation of the framework. It is a vital public good that must be preserved and strengthened.”