How Political Pressure Is Testing Central Banks

Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates · Jul 26, 2026 · 8m · transcript

In March 2026, the Turkish lira hit a new low after President Erdogan appointed a dovish central bank governor. This episode dives into the theory of central bank independence, why it matters for inflation control, and the political pressures threatening it worldwide. Lucas and Luna explore the time inconsistency problem, the empirical evidence linking independence to lower inflation, and real-world examples from Turkey, Japan, and the United States. They also examine the tension between democratic accountability and the need for technical independence. A must-listen for anyone wondering why…