I see three main reasons why central bank independence may move into the focus of public policy discussions: [9] First, inflation is expected to remain comparatively high over the next couple of years. The past decade has witnessed relatively low and stable inflation across advanced economies (Graph 1).
Fiscal income will deteriorate even further while the shadow economy will gain in importance. Governments will focus almost exclusively on financing current consumption (wages and pensions), even through accumulation of fresh debt, while capital investments will be substantially cut back.