Central banks are wrong to abandon key guardrails - FT中文网
登录×
电子邮件/用户名
密码
记住我
请输入邮箱和密码进行绑定操作:
请输入手机号码,通过短信验证(目前仅支持中国大陆地区的手机号):
请您阅读我们的用户注册协议隐私权保护政策,点击下方按钮即视为您接受。
观点 FT财富之管理

Central banks are wrong to abandon key guardrails

Emerging markets can teach us all a lesson about the importance of not relying solely on discretion
00:00

The writer is a former central banker and a professor of finance at the University of Chicago’s Booth School of Business

Macroeconomic policy in industrial countries has become much more discretionary of late, and not necessarily in a good way. When sensible, it is focused on the long term, and moves to stabilise the economic cycle rather than accentuate it. So the government should shrink deficits when the economy is doing well, even as monetary policy gets tighter, and the opposite should happen when the economy is doing poorly. One benefit of pulling back policy stimulus in boom times is that it preserves the capacity to intervene in downturns.

However, few politicians like to cut back when the economy is doing well, and central bankers might be unwilling to incur public ire by raising rates just as the party gets going. Countries with dysfunctional politics are particularly prone to overspending and contractionary policies set in only when there are no other alternatives.

Recognising the folly of such cycle-accentuating policies, many industrial countries previously adopted self-constraining guardrails such as inflation-targeting frameworks for the central bank, deficit rules and debt brakes for the government, and so on. Over time, as they saw economic volatility in industrial countries moderate, a number of emerging markets got religion and adopted these guardrails.

So far, so Economics 101. The global financial crisis of 2008 upended the political consensus. Central banks came under scrutiny, not so much for missing the pre-crisis risk-taking, but for not doing enough to revive growth — after all, inflation was consistently below target post-crisis. And so they pulled out all the stops, holding rates at zero for long periods, and engaging in quantitative easing. The Federal Reserve even changed its framework to target average inflation, committing to be more tolerant if it materialised.

Even before economies had normalised, though, the pandemic hit in 2020, followed by the Ukraine war. Government spending took off, with the rationale that these rare events were nobody’s fault, and everyone’s suffering should be alleviated. Fiscal concerns and constraining guardrails were overridden.

In the US, every constituency, from pensioners to airlines, was appeased through multiple rounds of stimulus. A bond market anaesthetised by Fed bond buying showed little concern. The spending contributed to inflation that the Fed, held back by its more tolerant framework, was initially slow to address. However, even as it has raised rates rapidly, the US continues with fiscal deficits of a size never seen outside recessions. With Congress divided, it is hard to see these shrinking significantly. Monetary policy is fighting fiscal policy, a textbook no-no.

There seems to be little urgency to rein in spending elsewhere either. Europe intends to return to its rules on deficits next year, but it is unlikely these will be enforced for some time. The over-indebted Japanese government’s latest supplementary budget is intended to help citizens with rising prices, even as inflation is taking off.

Interestingly, some emerging markets such as Brazil and Mexico have been much more cautious in expanding deficits. Borrowing was contained. They raised rates early, when they saw signs of inflation. Consequently, they have not experienced the usual emerging market jitters. Orthodox policy guardrails have stabilised their outcomes, despite significant domestic political volatility.

Notwithstanding such examples, there is a tendency among some industrial country policymakers to claim they do not need to restore their abandoned guardrails. They assume they will use discretion wisely. If only! Politics are likely to become yet more dysfunctional, not just in the US, but also in Europe, as countries grapple with ageing, immigration and climate action, even as debt service eats away more and more government revenues. In this regard, the German Constitutional Court’s decision to restore pre-pandemic constraints on deficits should be welcomed.

With the inflation genie unleashed, central banks need to refocus their frameworks on combating high inflation rather than being tolerant of it. The Fed seems to have rightly abandoned average inflation targeting, not least because recent high levels may require it to go well below 2 per cent if it is to reach a reasonable average. When inflation is tamed, the Fed will have to revisit its framework, perhaps restoring much of the pre-pandemic one.

Of course, reinstating macroeconomic guardrails may not do much to constrain Donald Trump, who even threatens democracy if he is restored to power. But as emerging markets have learnt, every little helps.

版权声明:本文版权归FT中文网所有,未经允许任何单位或个人不得转载,复制或以任何其他方式使用本文全部或部分,侵权必究。

硅谷在特朗普支持下挑战欧盟技术规则

Meta等美国团体有了特朗普撑腰,试图让有关人工智能和市场支配地位的欧盟规定在执行时缩水。

欧洲如何在没有美国帮助的情况下保卫自己

欧洲各国正争相填补安全缺口,以防特朗普撤走美国驻欧军事资产。

比亚迪的战略转变将冲击全球汽车制造商

比亚迪将先进驾驶辅助系统作为标准配置,不收取额外费用,这将会削弱竞争对手的实力。

Lex专栏:欧洲天然气面临似曾相识的局面

除非欧洲大陆修复其潜在的能源结构,否则很难完全消除俄罗斯进口天然气的诱惑。

苹果悄悄转向印度

苹果希望在中国以外实现供应链多元化,印度能抓住这个机会吗?

“莫迪-特朗普”能源承诺为美国天然气出口商带来红利

莫迪和特朗普上周同意增加美国石油和天然气出口,这是两国贸易关系再平衡努力的一部分。
设置字号×
最小
较小
默认
较大
最大
分享×