From the Fed to the Bank of England, central banks must up their game | Howard Davies

Becoming better at explaining and justifying their decisions to the public should be on the agenda

The US president Donald Trump's decision to nominate the economist Judy Shelton for one of the vacant positions on the Federal Reserve Board has put the future of central bank independence back on the agenda. Shelton has cast doubt on the desirability of, and legal basis for, Fed independence, saying last year, "I don't see any reference to independence in the legislation that has defined the role of the Federal Reserve." And she has argued for "a more coordinated relationship with both Congress and the president". If Fed policy were "coordinated" with Trump, then it is fairly clear who would be calling the shots.

Of course, one new Fed governor could not upturn decades of practice. But there are suggestions that if appointed, Shelton could replace Jay Powell when his term comes up for renewal in 2022, leaving a fox in charge of the chicken coop.

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