How crucial is central bank independence?

In light of the US criminal investigation into Fed Chair Powell, we are highlighting this previous analysis first published in September 2025. Our conclusion was that the strength of the evidence in favour of greater central bank autonomy lowering inflation has often been overstated, and even complete independence offers no guarantee of low inflation in future. But sustained political intrusion into monetary policy would come at a cost, even if markets are willing to overlook it in the short term.