Central bank credibility

Question

Quizplus · Accepted Answer

Central bank independence is crucial for maintaining credibility in the eyes of the public and the markets. When a central bank operates independently of political pressures, it can make decisions based on economic indicators and long-term goals, such as controlling inflation and ensuring financial stability. This independence helps in building trust that the central bank will act in the economy's best interest, rather than in response to short-term political considerations.

Central Bank Credibility