The Central Banks New Mandate: Social Justice, Race, Gender Issues, Climate Change And Inequality

One upon a time, when central bank “independence” first materialized – even though as we have noted in the past central banks are anything but independent (see “Who Owns The World’s Central Banks“)…

… their mandate was to control inflation and generally this was their absolute priority.

However, as DB’s Jim Reid writes today, recent years have seen central banks increasingly enter the debate on numerous other topics including fiscal policy, social justice, race, gender issues, climate change and inequality.

Enter Reid’s “chart of the day”, which shows a snapshot of this in terms of mentions of inequality over time in speeches from developed market central bank officials.

As Reid says, while “these are all admirable and crucial topics to discuss and could help make the world a better place” it does however show “how central bank power and influence has changed and also how they seem to be giving governments cover to spend on these issues.”

He also adds that this is one of the reasons an increasingly vocal minority of the DB Research staff thinks inflation is more likely going forward (see DB’s thoughts on why Inflation Is About To Explode “Leaving Global Economies Sitting On A Time Bomb“). As Reid concludes, governments want to spend more to deal with the issues above and central banks seem increasingly comfortable to support them in that aim. As a result, co-ordinated monetary and fiscal policy is more likely going forward. It’s also time to ask just who elected these “independent” central bankers, and demand independence from their ideological bias.