In 2023, analysts and economists are delving deep into the CBI indices. Along the way, they’re finding some huge changes that are recalibrating the entire state of global monetary policy. This year’s update highlights a continuing global trend towards increased independence for central banks around the world. Recent political events in the United States have sparked discussions about the implications of central bank independence, particularly following actions taken by former President Donald Trump.
The recent dismissal of Federal Reserve Governor Lisa Cook by Trump has put the presidential power to influence central banking under a magnifying glass. Trump has vocally opposed Federal Reserve Chairman Jerome Powell in the past on various occasions. This history of conduct underscores his objective to further centralize control over monetary policy. Yet over the course of his presidency, Trump repeatedly pushed for lower real key interest rates. This was an unmistakable warning shot that he wanted to affect the Fed’s decision-making.
Central Bank Independence Indices
The Central Bank Independence indices estimate the degree of autonomy that central banks enjoy in their day-to-day functioning. They consider how independent their decision-making processes are. The European Central Bank (ECB) gets a 0.9 on the index. This enviable rating underscores its robust independence to steer monetary policy across the Eurozone, which recently expanded to include Croatia, Slovakia and Slovenia.
Coming in a close second is Poland’s central bank, with a score of 0.85, showing a very solid independent streak. Romania and Czechia both tie with a score of 0.8, highlighting their determination to stay independent in their monetary policymaking. By contrast, Hungary’s central bank barely scrapes a score of 0.66, indicating that there are serious threats to its independence.
These scores paint a mixed picture of central bank independence in Europe. Countries have become more ambitious in their race for autonomy. They want to protect their monetary authorities from short-term political pressure and protect long-term stability in their economies.
Economic Developments in Central and Eastern Europe
Besides looking at central bank independence, we can’t overlook the economic indicators in Central and Eastern Europe. Croatia’s economy is doing well on all fronts! In the second quarter of 2025, its GDP exploded 3.4% year-over-year, up from 2.9% in the first quarter. This increase in positive growth is a promising indication of the resilience and rebound potential that lives within this region.
Though there is rapid economic growth in Croatia, the scene is much bleaker in Hungary’s stark economic landscape. Average wages, meanwhile, witnessed an exceptional increase of 9.7% year-over-year in June. The Federal Reserve currently faces conundrums like those caused by its recent loss of independence score. This has led to legitimate concerns about how monetary policy will adjust in order to spur growth in the future while curbing instability.
Romania is experiencing a particularly sandbox economic environment. With Prime Minister Bolojan preparing to announce a second wave of reforms to address the European Union’s biggest budget hole…These proposed reforms would improve the central bank’s focuses and its capacity to carry out its work independently in a known politically incendiary environment.
Implications for Future Monetary Policy
Political influence and central bank independence are a central theme in the book. This relationship raises fundamental questions for the future of monetary policy in the United States as well as Central and Eastern Europe. Global trends are moving in the opposite direction, toward greater central bank independence. It will be very important to observe how these institutions manage political pressures, including the optics, to seek and achieve economic stability.
The Federal Reserve’s predicament during Trump’s presidency illustrates the dangers of undermined independence. This has been an incredibly important case study in order to know what could happen. Protecting central bank independence is more important than ever. It is what makes monetary policy decisions effective, even when the political winds shift.