The real problem of economic policy

Monetary and fiscal policy can’t remain separate

Inflation is up the world over and Central Banks are doing the one thing they can do to combat it: they’re raising interest rates. But as recently demonstrated in the U.K., government budgets can sabotage the work Central Banks try to do: increases in government spending can further fuel inflation. It’s time to question the strict separation of the monetary policy of central banks from the fiscal policy of governments and advocate for closer coordination between the two, argues Charles Goodhart.

 

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