SAN DIEGO Jan 4 Central banks have sacrificed some of their cherished political independence by undertaking fiscal-like policies to help repair the damage of the global financial crisis, a senior official of the Federal Reserve said on Friday, as he called the ECB one of the worst offenders.
James Bullard, president of the St. Louis Federal Reserve Bank, called the European Central Bank's bond-buying program a "fiscalization" of monetary policy, and said it had weakened the ECB's response to the European recession.
"Why? By nearly all accounts, the monetary policy process has been bogged down by political wrangling over the OMT and other programs," Bullard said in remarks prepared for delivery at the American Economic Association on central bank independence.
The OMT, or outright monetary transaction program, is the ECB's bond-buying program that allows for potentially unlimited interventions for ailing states.
The Fed has also been accused of straying into fiscal policy territory, which is supposed to be the exclusive preserve of elected politicians in the United States.
John Taylor, author of the influential Taylor Rule for central bankers, has been one of the most outspoken of these critics and sat on the panel with Bullard.