The limits of central bank independence

ZURICH, Switzerland — Central banks are not sovereign principalities, and their governors are not sovereign princes. While central bank independence has been essential to effective policymaking in recent decades — giving monetary authorities the political cover to pursue necessary but potentially painful measures when conditions demand — the limits of the principle are almost certain to become clearer in the coming years.

The reason is not that there have been catastrophic monetary policy mistakes or that governments want to manage monetary policy themselves. Central banks have generally done a good job, and governments are happy to let them do it.