Why Central Bank Independence Matters: Global lessons as Trump targets Fed Governor
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Central bank independence — the ability to set interest rates without political interference — is widely regarded as essential to a country’s economic stability, and it is a key reason President Donald Trump’s attempt to remove Federal Reserve Governor Lisa Cook has drawn intense scrutiny. Decades of academic research reviewed by Reuters show that countries where central banks bend to political pressure tend to experience worse economic outcomes, including higher inflation, currency instability and weaker long-term growth. By contrast, independent central banks have historically been more effective at maintaining price stability and anchoring public confidence. Across the world, there are multiple examples where political control over monetary policy led to economic turmoil. Turkey offers one of the clearest modern cases. Between 2019 and 2023, President Tayyip Erdogan dismissed four central bank governors for resisting his push for lower...