IMF chief urges c. banks independence amid political pressure

International Monetary Fund (IMF) Managing Director, Kristalina Georgieva, warned that central banks are under growing political pressure to cut interest rates during election years, stressing the need for independence, Reuters reported on Thursday.

Georgieva noted that central banks with more autonomy are better at controlling inflation and inflation expectations. She also highlighted that demands for rate cuts are growing prematurely, especially with half the world’s population voting this year.

She urged governments and central bankers to resist political interference in decision-making and personnel appointments.

Georgieva emphasised the significance of central bank independence in navigating economic challenges, citing examples from the past. She stressed that strong governance is crucial to safeguard central bank autonomy and highlighted the role of fiscal prudence in supporting monetary policy objectives.

She also mentioned the IMF’s readiness to assist member countries in enhancing their monetary policy frameworks, emphasising the importance of independence in Fund-supported financing programs.