Central bank policymakers should not assume reputations will recover | Howard Davies

As inflation soars, the Fed, ECB, Bank of England and others are more regularly challenged than in the past

Who would want to be responsible for monetary policy in 2022? To judge from the fierce economic and political debates under way around the world, it is as though open season has been declared on central bank governors: they are being criticised from all sides.

The US Federal Reserve chair, Jerome Powell, and his colleagues are accused of failing to spot the early signs of an inflationary threat last year. As late as last autumn, they were arguing that price rises were transitory". With annual US inflation today approaching double figures, that looks to have been a poor judgment. But now that the Fed has acknowledged its mistake and is raising interest rates, many accuse it of choking off the post-pandemic recovery, collapsing equity and bond markets, and precipitating a recession.