Threats to central bank independence are no longer just an “emerging-market phenomenon,” according to South African Reserve Bank Governor Lesetja Kganyago.
Kganyago mentioned recent attacks on the U.S Federal Reserve, Bank of England and European Central Bank as examples at a lunch with editors in Johannesburg on Thursday.
“There’s a concern among the central banking community that the independence of central banks could be under threat,” said Kganyago, who is also the chairman of the policy advisory committee of the Board of Governors of the International Monetary Fund. “If politicians got their way on that one, they may just the decide to go for the judiciary and then go for the next institution and then the next institution.”
The rise of populism in developed economies has brought with it a wave of attacks on central banks. In the U.S, Fed Chairman Jerome Powell has come under increasing pressure from President Donald Trump over the central bank’s gradual increase of interest rates. Italy’s populist government has accused ECB President Mario Draghi of “ poisoning the atmosphere.” And in the U.K., Governor Mark Carney has faced repeated verbal lashings over the Bank of England’s Brexit analysis.
Kganyago is no stranger to the battle for independence of a central bank. Last year he successfully fought off a proposal by the nation’s anti-graft ombudsman to change the constitution to remove the Reserve Bank’s inflation-target mandate.
And in an August interview, he vowed that if the ruling African National Congress’s move to bring the central bank under state ownership interferes with its mandate or independence, “they’ve got a fight on their hands.”