Investment Office Logo

Why Central Bank Independence Could Become a Thing of the Past

Declining credibility and the rise of populism pose significant challenges.
Nikolaj Schmidt, Chief International Economist
T. Rowe Price,  Insights on Macroeconomics, September 2019

Key Insights

  • Central banks across the world are facing challenges to their independence amid
    declining credibility and attacks from politicians.
  • Economically, the likely impact of reduced central bank independence is higher
    inflation and a more volatile business cycle.
  • The similarities with the economic conditions of the 1970s suggest that
    stagflation trades, such as gold and inflation-linked securities, could be effective.