MNI BRIEF: Politicised Fed Could Affect ECB Policy - Nagel

A politically partisan U.S. Federal Reserve could not only undermine the principle of central bank independence globally, it could have monetary policy implications for the European Central Bank, Bundesbank president Joachim Nagel said in a speech on Thursday.

“Currently, we are observing considerable political pressure being exerted on the Federal Reserve. If this political pressure succeeds, it could be taken as a blueprint for politicians in other countries to pursue similar policies. If that were to happen, inflation levels could increase all over the world,” Nagel said.

“Since the world economy is interconnected, political pressure in one country could make pursuing price stability more difficult for the Eurosystem as well. That is one of the reasons why, for me, it is so important to clearly commit to the independence of central banks.”