ECB's independence from political pressure is maintained through strict rules and distributed appointment powers.

From Morningstar: 2025-05-12 10:43:00

President Trump has clashed with US central bank chair Jerome Powell over interest rates. In Europe, ECB President Lagarde is shielded from political influence due to the election process and strict rules for removal. ECB and Fed collaborate, but ECB faces challenges like lack of full union and diversified voices in policymaking.

ECB President and Executive Board members are appointed by the European Council, with input from the European Parliament. The diverse voices in the ECB Governing Council create challenges but prevent any one government from steering policy. The eurozone’s lack of full union poses structural challenges for the ECB, especially during crises.

Central bank independence is crucial for market trust and stability. The Bank of England’s autonomy has been upheld despite political challenges. Doubts about the Fed’s credibility could lead to higher inflation and borrowing costs. ECB’s independence, with distributed appointment powers and strict dismissal rules, safeguards against political interference.



Read more at Morningstar: Is the ECB Truly Independent from Political Pressure?