Central Bank Independence Under Siege
The post-inflation political backlash threatens the institutional foundations of monetary policy
Central bank independence was a gift from politicians who understood their own weaknesses. The current generation does not share that humility.
The independence of central banks — their insulation from short-term political pressures — is one of the most important institutional innovations of the twentieth century. It is also one of the most fragile. From Washington to Ankara to Buenos Aires, political leaders are challenging the autonomy of their monetary authorities with an aggression not seen in decades.
The proximate cause is inflation. Central banks that are perceived to have been too slow to tighten — and then too aggressive in their response — have lost public trust. A 2025 Gallup poll found that only 38% of Americans have confidence in the Federal Reserve, down from 55% in 2020.
Central bank independence was a gift from politicians who understood their own weaknesses. The current generation does not share that humility.
The Historical Precedent
Central bank independence is younger than most people realize. The Bank of England was granted operational independence in 1997. The European Central Bank was independent from its founding in 1998. The Federal Reserve’s de facto independence evolved gradually and remains based on convention rather than constitutional protection.
The Populist Challenge
Both left and right populist movements have found common ground in criticizing central banks — the left for prioritizing inflation over employment, the right for perceived regulatory overreach and climate activism.