00:00There's one question that affects your mortgage, your savings, the price of everything.
00:06Do you work for Donald Trump?
00:07If I'm permitted to say we're an independent central bank, our independence came from you.
00:12So who does a central banker actually work for?
00:16It's a fair question, and the answer is more complicated than independent makes it sound.
00:22Central bankers don't work for the president.
00:25Being controlled by the politician who appointed them is a bad idea.
00:30We've seen where that leads.
00:32I'll take responsibility as the indisputable head of the executive in respect of the steps to be taken and the
00:38decisions on these issues.
00:40Erdogan argued for greater control over interest rates.
00:44He got his wish, and Turkish inflation topped 85% in 2022.
00:50That's the danger of putting monetary policy in one leader's hands.
00:53But the case for independence isn't only about preventing bad political decisions.
00:59It's also about making painful economic ones.
01:02Paul Volcker is the perfect example.
01:04When he became Federal Reserve Chair in 1979, inflation had taken hold across the American economy.
01:12Under Volcker, the Fed pushed interest rates as high as 20%.
01:16That made mortgages, business loans, and almost every other form of borrowing brutally expensive.
01:22It was deeply unpopular, but it helped break inflation's grip.
01:26Sometimes the right answers for the economy hurt now and pay off later.
01:31Central bankers need enough independence to make those calls and see them through.
01:37Politicians facing an election have lots of incentive to delay them.
01:41Ultimately, independence is not immunity.
01:44Distance from politics cannot mean freedom from consequences.
01:48Autonomy is an absolute.
01:50To be free to maneuver and perform their roles, the public must understand, trust, and support their decisions.
01:58Or as Ben Bernanke put it on his way out of the Fed.
02:01Congress is our boss.
02:02Bernanke's 2024 review of the Bank of England found weaknesses.
02:06The bank accepted his findings and began making changes.
02:10Its independence remained intact.
02:13That kind of scrutiny doesn't weaken independence.
02:16It's the price of keeping it.
02:18And that responsibility runs both ways.
02:20So who do central bankers work for?
02:23The central bank answers to one entity alone.
02:27The public.
02:28Not themselves and not one president.
02:31Politicians should set goals, scrutinize the results,
02:34and let central banks get on with it.
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