CENTRAL BANK INDEPENDENCE IN RETROSPECT 28 September 2017 Address at Bank of England “Independence: 20 Years On” Conference, London CENTRAL BANK INDEPENDENCE IN RETROSPECT Guy Debelle Deputy Governor

How Independent Should a Central Bank Be? Debelle and Fischer 1994 Goal Dependence Instrument Independence

Goal Dependence/Instrument Independence The Bundesbank and the output costs of inflation control (sacrifice ratio) Theoretical literature Rules v Discretion Rogoff’s conservative central banker Walsh’s performance contract/RBNZ Empirical results Increased CBI → Low inflation

Has CB Independence Delivered? The NICE decade Update the empirics: Balls et al The UK 2010-2012 But what about the crisis?

Central bank independence under threat? The crisis Is CBI to blame? Monetary policy the only game in town? Distributional consequences of monetary policy Ever been thus. Why more now? Wages

Conclusion Financial Stability and Independence Accountability is key

CENTRAL BANK INDEPENDENCE IN RETROSPECT 28 September 2017 Address at Bank of England “Independence: 20 Years On” Conference, London CENTRAL BANK INDEPENDENCE IN RETROSPECT Guy Debelle Deputy Governor