By Kenneth S. Rogoff

IMES Discussion Paper Series No. 22-E-09 (Jul 2022).

Date Published: Jul 2022

Introduction

It is great honor to give the 2022 Mayekawa Lecture at the Bank of Japan. My topic today is how central bank independence has been challenged in the zero-bound era, and how it is likely to be challenged further in the coming if contemporary trends in deglobalization are sustained. Central bank independence, of course, is the bedrock of modern inflation targeting, which itself is a way of asserting and reinforcing independence. Too much analysis of central bank policy takes independence as given, focusing solely on technical issues, and ignoring underlying political economy issues that have become far more acute in an era where the zero bound has radically curtailed conventional monetary policy, and populism has created enormous pressures for mission creep.