LIVE UPDATES
The International Monetary Fund (IMF) has called on countries to preserve and strengthen the independence of their central banks to ensure price stability and support long-term economic growth.
IMF's Managing Director, Kristalina GeorgievaIn, who made the call via the Fund's blog, said that in recent decades, many countries worldwide have increased the autonomy of central banks, tasking them with fighting inflation and restoring stable prices.
She noted that preserving and strengthening the Apex bank have proven critical to the recent success many countries have had in fighting post-pandemic surges in inflation around the globe.
“Central bank independence matters for price stability — and price stability matters for consistent long-term growth,” she said.
“Financial stability benefits the whole economy and reduces the risk that the central bank becomes reluctant to raise interest rates for fear of causing a financial meltdown,” she added.
Georgieva contrasted the years since the COVID-19 pandemic with the high inflationary period of the 1970s, arguing that a lack of central bank independence at that time meant politicians were often pressured to take actions that undermined price stability.
“When central banks and governments each play their roles, we have seen better control of inflation, better outcomes in growth and employment, and lower financial stability risks,” she said.
