The insidious threats to central-bank independence
Meddling politicians are mostly a thing of the past, but that is no reason for complacency
“Just kick ’em up the rump a little.” That was how President Richard Nixon advised Federal Reserve chairman Arthur Burns to persuade the rest of the Fed board to cut interest rates in 1971. Kicked or not, the central bankers complied. Cuts helped Nixon to re-election by boosting employment. They also contributed to double-digit inflation that would not be decisively tamed until Paul Volcker ran the Fed in the 1980s.
This article appeared in the Finance & economics section of the print edition under the headline “Modern Nixons”
Finance & economics
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