John Driffill's picture
Affiliation: 
Birkbeck College, University of London
Credentials: 
Professor of economics

Voting history

The Future of Central Bank Independence

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Question 2: Do you agree that the traditional argument that less central bank independence leads to higher inflation will (still) be relevant over the next 48 months in Western economies?

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Answer:
Agree
Confidence level:
Confident
Comment:
The argument will remain relevant, despite weak demand in the Euro zone and Japan. If populist governments in the US or UK get more control of monetary policy, there may be no danger of higher inflation in the short run, but it would bring risks of inflation further into the future.

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Question 3: More generally, do you agree that it is desirable to maintain central bank independence? Again focus on the near future, say next 48 months.

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Answer:
Agree
Confidence level:
Confident

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Question 1: Do you agree that central bank independence in the Eurozone and the UK will decline over the next 48 months?

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Answer:
Disagree
Confidence level:
Confident
Comment:
Central bank independence has been --- is being -- challenged, as Central Banks have been drawn further into actions with clearer fiscal aspects, and further from a narrow technical role. But I expect them to defend their positions firmly. Trump may challenge the independence of the Fed in the coming months, but I expect the Fed to be able to reassert its independence as the inconsistencies in the Trump administration's policies and views become clearer.

German Council of Economic Experts' view of ECB policy

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Question 2: Do you agree that the ECB's monetary policy masks structural problems of member states?

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Answer:
Disagree
Confidence level:
Confident
Comment:
It doesn't mask them. It may ameliorate their effects. Member states in which "further structural reforms are needed that facilitate more flexible wage and price formation and increase labour mobility" (as the report says) will be able to make such reforms more easily in an situation of low unemployment and robust growth rather than in a high unemployment/low growth situation, since the initial effects of such reforms might well be to cause more, not less, unemployment, even though their long-term effects will enable lower unemployment.

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Question 1: Do you agree that exceptionally loose monetary policy by the European Central Bank is no longer appropriate?

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Answer:
Disagree
Confidence level:
Confident
Comment:
Inflation in the Euro zone is still well below 2% and is likely to stay there. The ECB should continue to pursue its 'exceptionally loose' policy until there are clear signs that inflation is likely to exceed the 2% target rate. Only then should any tightening be considered.

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