{
  "title": "New Worries for Central Bankers",
  "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2023/03/editor-letter-new-worries-for-central-bankers",
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  "summary": "“The job of the central bank is to worry.” That’s how Alice Rivlin, vice chair of the Federal Reserve Board in the 1990s, described the work of monetary policymakers. Back then, central bankers had one main concern: to keep inflation in check.",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Title: New Worries for Central Bankers\n- Author/role: GITA BHATT, F&D editor-in-chief.\n- Date: March 2023\n- Read time note in source: Less than a minute(0 words) Read\n- Opening quote preserved exactly: “The job of the central bank is to worry.” — Alice Rivlin, vice chair of the Federal Reserve Board in the 1990s."
    },
    {
      "heading": "Emerging challenges for monetary policymakers",
      "content": "- Inflation is no longer the sole concern; it is one of several worries facing central banks.\n- Structural forces complicating the policy challenge:\n  - deglobalization\n  - climate change\n  - aging populations\n  - the advent of digital money\n- A rapidly changing economic backdrop reduces maneuvering room for policy.\n- Central bank mandates and independence are under increasing political pressure.\n- These new forces raise questions about how monetary policy may have to change going forward."
    },
    {
      "heading": "Contributions and key insights in this Finance & Development issue",
      "content": "- Gita Gopinath (IMF):\n  - Economists need improved tools after existing models missed the recent inflation surge.\n- Masaaki Shirakawa (former governor, Bank of Japan):\n  - Time to reconsider the foundation and framework for monetary policy, paying attention to national differences.\n- Markus Brunnermeier (Princeton):\n  - In a post-pandemic world with higher inflation, lower growth, and more debt, central banks are still pursuing policies modelled for the days of tepid inflation, low interest rates, and robust growth.\n- Raghuram Rajan (former governor, Reserve Bank of India):\n  - “Less is more”: central banks should refocus on their primary role, price stability, while respecting financial stability.\n- Giancarlo Corsetti (European University Institute):\n  - Exceptional circumstances such as the pandemic may call for monetary and fiscal authorities to work together—but only temporarily and never at the cost of their independence.\n- David G. Blanchflower and Andrew T. Levin (Dartmouth College):\n  - Suggest ways central bankers can avoid the temptation of groupthink, which can threaten credibility.\n- Greg Kaplan, Benjamin Moll, and Giovanni Violante (academics):\n  - New economic models show how monetary policy influences income and wealth distribution.\n- Michael Weber (University of Chicago):\n  - Series of surveys reveal how better monetary policy communications can shape expectations.\n- Other central banker perspectives included:\n  - Philip Lane (European Central Bank): euro area inflation and the challenge of shrinking the balance sheet.\n  - Lesetja Kganyago (South African Reserve Bank), Sukudhew Singh (former deputy governor, Bank Negara Malaysia), Leonardo Villar (Colombia’s central bank): discuss fiscal-monetary interactions, foreign exchange intervention, and inflation targeting.\n  - Karnit Flug (former governor, Bank of Israel): highlights the importance of central bank accountability and transparency."
    },
    {
      "heading": "Policy implications and themes for future monetary frameworks",
      "content": "- Need to improve economic models and tools to better capture inflation dynamics and structural shifts.\n- Reconsideration of monetary policy foundations and frameworks with sensitivity to national differences.\n- Re-emphasis on price stability as the core mandate, while maintaining attention to financial stability.\n- Limited, temporary coordination between monetary and fiscal authorities may be warranted under exceptional circumstances, but should not undermine central bank independence.\n- Guard against groupthink within central banking communities to preserve credibility.\n- Incorporate distributional effects of monetary policy into analysis and design.\n- Strengthen monetary policy communications to shape public expectations effectively.\n- Increase transparency and accountability of central banks."
    },
    {
      "heading": "Final editorial note",
      "content": "- The editor frames economics as a discipline evolving in a highly uncertain era that demands reflection on models, customs, and assumptions, and expresses hope the issue sparks further debate.\n\nF&D Magazine — New Worries for Central Bankers — GITA BHATT — March 2023\n\n---\n\n Content in this bundle\n\n- F&D March 2023:  New Worries for Central Bankers\n  - F&D March 2023:  New Worries for Central Bankers (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - F&D March 2023:  New Worries for Central Bankers (PDF){rel=\"external\" type=\"application/pdf\"}\n- F&D March 2023: New Directions for Monetary Policy\n  - F&D March 2023: New Directions for Monetary Policy (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - F&D March 2023: New Directions for Monetary Policy (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/fandd/issues/2023/03/editor-letter-new-worries-for-central-bankers"
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    "Authors: GITA BHATT",
    "Published: March 1, 2023",
    "Title: New Worries for Central Bankers",
    "Author/role: GITA BHATT, F&D editor-in-chief.",
    "Date: March 2023",
    "Read time note in source: Less than a minute(0 words) Read",
    "Opening quote preserved exactly: “The job of the central bank is to worry.” — Alice Rivlin, vice chair of the Federal Reserve Board in the 1990s.",
    "Inflation is no longer the sole concern; it is one of several worries facing central banks.",
    "Structural forces complicating the policy challenge:",
    "A rapidly changing economic backdrop reduces maneuvering room for policy.",
    "Central bank mandates and independence are under increasing political pressure.",
    "These new forces raise questions about how monetary policy may have to change going forward.",
    "Gita Gopinath (IMF):",
    "Masaaki Shirakawa (former governor, Bank of Japan):",
    "Markus Brunnermeier (Princeton):",
    "Raghuram Rajan (former governor, Reserve Bank of India):",
    "Giancarlo Corsetti (European University Institute):",
    "David G. Blanchflower and Andrew T. Levin (Dartmouth College):",
    "Greg Kaplan, Benjamin Moll, and Giovanni Violante (academics):",
    "Michael Weber (University of Chicago):",
    "Other central banker perspectives included:",
    "Need to improve economic models and tools to better capture inflation dynamics and structural shifts.",
    "Reconsideration of monetary policy foundations and frameworks with sensitivity to national differences.",
    "Re-emphasis on price stability as the core mandate, while maintaining attention to financial stability.",
    "Limited, temporary coordination between monetary and fiscal authorities may be warranted under exceptional circumstances, but should not undermine central bank independence.",
    "Guard against groupthink within central banking communities to preserve credibility.",
    "Incorporate distributional effects of monetary policy into analysis and design.",
    "Strengthen monetary policy communications to shape public expectations effectively.",
    "Increase transparency and accountability of central banks.",
    "The editor frames economics as a discipline evolving in a highly uncertain era that demands reflection on models, customs, and assumptions, and expresses hope the issue sparks further debate.",
    "**F&D March 2023:  New Worries for Central Bankers**",
    "**F&D March 2023: New Directions for Monetary Policy**"
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