Pressure builds up for world’s central bankers

NUSA DUA, Indonesia/FRANKFURT (Reuters) — Central bankers from the US to Europe are coming under pressure from their governments to loosen their purse strings again as a decade of accelerating economic growth and booming markets fueled by cheap cash comes to an end.

For 10 years since the global financial crash of 2008, the Federal Reserve and other central banks across the world have engineered a global upswing through ultra-low interest rates and massive money-printing programs.

As inflation recovers, rate-setters are now tightening their policy, leaving indebted governments, entrepreneurs and households feeling the pinch from higher borrowing costs and, in fragile emerging economies, sliding currencies.

What started as an issue for countries with sizeable US dollar debt such as Argentina and Turkey is now reaching the world’s richest and supposedly most advanced economies in the United States and the euro zone.

US President Donald Trump launched a scathing attack on the Federal Reserve this week for being “too aggressive” in raising rates and labeled the institution “crazy,” “loco,” “ridiculous” and “too cute.”

Earlier this year, Italy’s ruling parties floated the idea of getting the European Central Bank to forgive some of the country’s huge debt pile or offer a guarantee on it.

The central banks of Turkey and South Africa have also been blamed by their governments for being too tight with their policy.

The clash threatens to tarnish the golden rule of developed financial systems for the past three decades: keep the money-printing presses away from elected politicians if you want to keep inflation in check.

This risk, part of a global wave of populism and aversion toward technocrats, worried policymakers at the International Monetary Fund’s annual meetings this week.

“They’re asking to change rates, (debt) cancellation, they’re asking them to do other things, buy bonds,” European Central Bank president Mario Draghi told a press conference at the IMF meeting on the Indonesian resort island of Bali.