Inflation fight puts central bank independence at risk
Current and former officials warned at a conference in Croatia that political interference is rising as central banks maintain high interest rates to curb inflation. Policymakers noted that high government debt and calls for lower rates threaten the credibility needed to ensure long-term price stability.
Central bank officials warned on Saturday that political pressure is threatening monetary independence as they maintain high interest rates to combat inflation. This friction intensified after global energy prices rose, forcing policymakers to choose between price stability and political popularity.
### The Cost of Fighting Inflation During a conference in Dubrovnik, Croatia, on Saturday, May 30, Helge Berger of the IMF European Department described the current environment as "hand to hand combat." He noted that maintaining independence is simple when inflation is low, but becomes difficult when policies turn unpopular.
