How Do Central Banks Factor in Political Shifts?

The video discusses how central banks, particularly in Europe and the US, are addressing economic risks amidst political shifts. It highlights the ongoing debate between austerity and growth, questioning the effectiveness of quantitative easing (QE) post-financial crisis. The discussion moves towards future strategies, suggesting a combination of loose monetary policy and fiscal spending to close output gaps and raise inflation expectations.

How has the political shift affected the way central banks operate?

What are the concerns of central banks regarding economic policies?

What is the relationship between quantitative easing (QE) and political risks?

What are the implications of the austerity versus growth debate in the context of the financial crisis?

What might be necessary to close output gaps and raise inflation expectations according to the discussion?