Economists Affirm Central Bank Independence as Crucial for Macroeconomic Stability, Preventing Monetary Politicization

A recent statement by "Santi" on social media has underscored a fundamental principle in economic governance: central bank independence is not merely a "technocratic whim" but a vital prerequisite for macroeconomic stability. The tweet, posted on October 18, 2025, emphasized that without an autonomous monetary authority, "money becomes an electoral tool and not a store of value." This perspective resonates deeply within economic circles, where the autonomy of central banks is widely considered a cornerstone of sound financial policy.

International institutions and academic research consistently support this view. The International Monetary Fund (IMF) highlights that central bank independence is critical for effectively combating inflation and fostering stable, long-term economic growth. Empirical evidence from various studies, including those reviewed by the IMF, indicates a clear association between higher central bank independence and lower inflation rates globally. This autonomy allows central banks to make monetary policy decisions free from short-term political pressures.

The concern that monetary policy could be manipulated for political gain is a central argument for independence. As noted by former Federal Reserve chair Ben Bernanke, a central bank susceptible to political influence might be pressured to pursue short-run expansionary policies, particularly during electoral cycles, which inevitably lead to painful inflation and undermine the currency's credibility. Such interference transforms money from a reliable store of value into a transient political instrument, eroding public trust and economic predictability.

Central bank independence encompasses several dimensions, including goal independence (setting objectives), instrument independence (choosing policy tools), financial independence (controlling its own budget), and personnel independence (protection from arbitrary removal). While the benefits of such autonomy are widely acknowledged, recent studies also emphasize that its effectiveness is often contingent on broader institutional commitments to the rule of law and a robust economic framework. Despite these nuances, the consensus remains that insulating monetary policy from political interference is essential for long-term economic health and stability.