In: Economics
ans a.A recent survey or a poll (not confirmed) shows that out of the total population of America less than half people trust the Federal reserve and think they are doing a good job, we know that criticism doesn't matter and neither this criticism is going to help the federal bank do its job but having a credible Central Bank is crucial in ensuring that the monetary policy transmission mechanism actually works.
People always criticise you no matter how good you do . For ex -From 1987 to 2006 Alan Greenspan was the chairman of the Federal reserve bank and when he left he had a huge 70% approval rating in public opinion polls. Even after that some economists and critics have argued that his loose monetary policy have led to a prolonged growth period.- or the meaning of saying this was that he was ultimately responsible for subsequent financial crisis and recession. Then the federal bank had to fail out banks at a huge cost of about 7.7 trillion dollars caused many Americans to distrust their central bank.
Acoording to economists and central bankers it is important for having a credible central banks to manage the inflationary expections.
To be credible or to prove that a central bank is credible if people will believe it will do what it says. In a world full of uncertainity it will reassure investors , businessess , govt, stakeholders to have some sense of certainty about the future .A non - credible bank cannot achieve the target before or better than a credible central bank.
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