Taking Monetary Policy to the People
Central banks’ large-scale quantitative easing takes them into uncharted territory, where the boundary between monetary and fiscal policy is blurred, and where negative interest rates create political pressures and protests from savers. Central bankers will have to address these concerns, or risk a political backlash.
LONDON – The United Kingdom was late to adopt central-bank independence, because then-Prime Minister Margaret Thatcher firmly opposed allowing unelected bankers to control interest rates. She famously asserted that she would never hand that control away, and the Bank of England was not set free until 1997, when Tony Blair’s first Labour government was elected.