In a highly interconnected world, unilateral action, especially in the systemically relevant economies, is not the solution to fixing trade imbalances. Instead, it undermines confidence, increases adverse spillover effects, and ultimately reduces global growth. Central banks and monetary policy have come under increased attention around the world recently. There are expectations that monetary policy should shoulder more responsibilities in addressing growth constraints.
However, these expectations need to be based on the constitutional or legislative mandates of central banks. They also need to acknowledge the merits of central bank independence in safeguarding macroeconomic and financial stability, which is key in ensuring that the economy is on a sustainable growth path.