Federal Reserve Official Emphasizes Importance Of Central Bank Independence

According to Odaily, Federal Reserve Governor Kugler on Thursday strongly defended the independence of central banks, asserting that keeping monetary policy decisions free from political influence can improve inflation outcomes. Kugler emphasized that central bank independence is fundamental to achieving low inflation, particularly in developed economies. She highlighted the importance of transparency and accountability as part of maintaining credibility. Kugler used the Federal Reserve as an example, noting that officials, including Fed Chair Powell, strive to clearly communicate the Fed's goals and actions. "Monetary policy operates, in part, by attempting to influence public perceptions of future economic conditions, so it is crucial to clearly convey these intentions," she stated. This clarity helps build credibility by legitimizing decisions and can make policy decisions more effective. Kugler added, "If a central bank acts in a way that convinces the public it is actively pursuing its stated goals, the central bank will be more credible."