Strictly Come Dancing star Ed Balls was the chief architect of UK central bank independence. Now, taking a break from learning the cha-cha-cha, he has called for the Bank of England's independence to be reined in.
The paper he has written two colleagues at the Kennedy School of Government at Harvard makes a key distinction between operational and political independence. The former has brought benefits in terms of price stability, but the latter does not bring any such benefits, and there is a need for greater political accountability: Bank independence
It is argued that the assumption that the more independence given to a central bank the better no long holds.
Of course, there are limits to the Bank of England's independence. The Chancellor sets the inflation target and appoints the Governor and key personnel.
The paper from Balls is very much in line with the political wind with prime minister Theresa May making implicit criticisms of the Bank's monetary policy and Donald Trump's criticisms of the Federal Reserve.
The grant of operational independence to the Bank of England formed a central underpinning of academic depoliticisation narratives, but recent political developments favour repolitcisation.
