Central bank independence and economic performance An inverse relationship between central bank independence and the level of inflation is supported by most empirical studies during the post Bretton-Woods period. The proponents for central bank independence generally cite empirical evidences of negative cross-country correlation between average inflation and the degree of central bank independence. It is, however, possible to question the veracity of this relationship.
While the objective of dampening the credit exuberance during boom and, thereby, moderate credit supply looks plausible, increasing credit supply during busts by leaning against the wind i.e.