By David Barwick – VIENNA (Econostream) – European Central Bank Governing Council member Martin Kocher on Tuesday expressed concern about the apparent use of legal pretexts by the US government to go after the Federal Reserve over what actually amounted to disagreement about monetary policy.
Speaking to media on the margins of the Central & Eastern European Forum, Kocher, who heads the Austrian National Bank, commented on recent developments in this regard by saying that “it's clear that central bank independence is a value that we should preserve everywhere in the world, and it's in the interest—and that’s important to mention—of the households and the businesses.”
While central banks naturally remained accountable, autonomy was important for the implementation of monetary policy, he said.
“And the worrying fact is that it seems to be the case that some of the issues that we're discussing about is not about some legal aspects, it is about monetary policy, and that's where the key of the independence lies,” he said.
It remained to be seen what the impact on monetary policy would be for the Fed itself but also, ultimately, the ECB, he said.
“But you have seen that the markets reacted to what's happening in the US,” he said. “So, there is, of course, attention to what is happening in the US, there is attention to what's happening everywhere in the world when it comes to central bank independence. And we all want to have stable financial markets, and that's what we are working for.”
It was normal for there to be some discussion whenever it was time to refill top Federal Reserve positions, he said. In the current case, however, “the concern is about monetary policy and the potential influence of politicians, politics, on monetary policy, where we need this independence to be to be effective.”
As for current ECB monetary policy, Kocher declined to support statements in recent days by Eesti Pank Governor Madis Müller and Banque de France Governor François Villeroy de Galhau suggesting that a rate hike this year could be all but excluded.
“I think we agreed on no precommitments for any rate decisions,” he said. “Uncertainty levels are high; we don't know what's going to happen. You've seen events unfolding already on the first 13 days of this year that might have an effect on economic developments, on inflation.”
“So, I'm strongly committed to this, to this meeting-by-meeting approach, and I think it's the right one, and that means we don't know what's going to happen during the next couple of months on the interest rates,” he added.