US Federal Reserve must remain independent

In many countries independence has been granted to the central bank as is the case with the US Federal Reserve to prevent monetary policy becoming a tool that can be abused by governments and politicians at the expense of good economic governance.

So, it is hard to believe that the present attack on the independence of the Fed by some in Congress is motivated by anything but the desire of politicians to tap into popular discontent with the authorities following the crisis that left many unemployed and in dire financial straits.

But, as a rule, the independence of the central banks has been good for those countries that have left the setting of interest rates with those who are charged with the effective management of the economy, rather than politicians interested in winning support by making money cheaply available, even at the risk of sparking damaging inflation.

While there may be some legitimate criticism of the way the Fed handled the financial crisis in the US, it has the expertise and experience to ensure that there is a sustainable economic recovery.

The US economy is too important to the world for monetary policy to be left in the hands of populist politicians. The Fed must remain independent.