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\u201cOf course our central bank is independent\u201d, the Turkish President, Recep Tayyip Erdogan, pretty much just declared, just before dismissing by presidential decree (on 7th<\/sup> July) the boss of Turkey\u2019s central bank, Murat Cetinkaya, stating that \u201ca central bank cannot ignore the signals sent by the President\u201d. It was in the last century and in another era \u2013 22 years ago in fact \u2013 that Gordon Brown, Britain\u2019s Chancellor of the Exchequer, made the surprise decision to grant the Bank of England total freedom to define the country\u2019s monetary policy. The setting of interest rates and inflation objectives is in fact something all too serious to leave to politicians who have so far made a habit of manipulating these instruments for the purpose of gaining election. Because it is obviously not just in Turkey and hybrid democracies that ally democracy and individual power, even dictatorship, where the executive branch is meddling with monetary policy.<\/p>\n After having fought tirelessly against Obama who was accused of maintaining artificially-low US rates, his successor Donald Trump has repeatedly intervened and stigmatised his own central bank and its President, Jerome Powell, accused of stifling the economy due to the progressive raising of US rates. Powell must therefore suffer the heavy fire \u2013 and trigger-happy tweets \u2013 of a US President who is trampling all over the feet of the prestigious Federal Reserve\u2019s independence. All central bankers are, alas, not called Mario Draghi who stood strong, for years, against the unhinged and vindictive Germans and Dutch railing against his courageous and effective policy that undeniably saved the euro. Because it is not this policy that will succeed him in this role, taking the risk least likely to tarnish his widespread, sparkling image.<\/p>\n As the Financial Times wrote a few days ago, the \u201cwhatever it takes\u201d attitude (of Draghi) that calmed the European tempest will become, with Christine Lagarde, simply \u201cwhatever\u201d. Having never taken any position in the economic debates that divided the North and South of Europe during the continent\u2019s sovereign debt crisis, and having clearly shown no tendency toward the monetary policy decisions adopted by the central bank under Trichet then Draghi, Christine Lagarde is nevertheless an excellent choice\u2026if the desire of Europe\u2019s leaders is indeed to transform the ECB into a deliberative assembly, indeed a recording chamber for their decisions, and into a soundboard for their concerns. Lagarde\u2019s nomination is therefore a purely and eminently political decision made by the French and German governments that are worried about bringing the central bank back into the fold. It is also a signal that will be interpreted unequivocally by the markets, because the ECB will lose \u2013 proportionate to the amount of press conferences and action (or inaction) Lagarde does \u2013 this precious credibility that remains an essential ingredient.<\/p>\n By choosing a rock star figure to head one of the most powerful central banks on the planet, Europe\u2019s leaders have thereby decreed that they don\u2019t need a central banker to run a central bank. Our world has thus barely evolved since Karl Polanyi (1886-1964) who described the unassailable political colouring of the job of a central banker.<\/p>\n","protected":false},"excerpt":{"rendered":" \u201cOf course our central bank is independent\u201d, the Turkish President, Recep Tayyip Erdogan, pretty much just declared, just before dismissing by presidential decree (on 7th July) the boss of Turkey\u2019s central bank, Murat Cetinkaya, stating that \u201ca central bank cannot ignore the signals sent by the President\u201d. It was in the last century and…<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"give_campaign_id":0,"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"mc4wp_mailchimp_campaign":[],"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"{title}\n\n{excerpt}\n\n{url}","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false,"jetpack_post_was_ever_published":false},"categories":[648941677,648941678],"tags":[],"class_list":["post-19527","post","type-post","status-publish","format-standard","hentry","category-christine-lagarde","category-ecb-2"],"yoast_head":"\n