Anand: Central Banks May Be Too Sensitive to Markets

The transcript discusses William Hague's criticism of central banks, arguing that their policies have led to economic inequality and public debt. Central banks face a dilemma as their actions are criticized regardless of the outcome. The discussion also covers the role of liquidity in solvency crises and the sensitivity of central banks to market reactions.

What is the main criticism William Hague has about central banks?

• They are too independent.

• They are increasing interest rates.

• They are creating economic inequality.

• They are reducing public debt.

What is the central dilemma faced by central banks according to the discussion?

• Whether to maintain independence or not.

• Whether to provide liquidity or not.

• Whether to focus on inflation or employment.

• Whether to increase taxes or not.

What unintended consequence is mentioned as a result of central banks' actions?

• Higher employment rates.

• Increased savings rates.

• Distortions in asset markets.

• Decreased political engagement.

How do central banks often respond to market reactions?

• By reducing public spending.

• By increasing interest rates.

• By making supportive statements.

• By ignoring them.

What paradox is highlighted in the final section regarding central banks?

• They increase interest rates but reduce taxes.

• They focus on employment but ignore inflation.

• They claim robustness but react to weak data.

• They promote savings but discourage investment.