There is a difference!
A reader sent me an article regarding Central Bank independence vs. Central Bank autonomy (see my post of 20 January). In summary, there is an operational difference and I should have gone beyond the simple dictionary definition of the terms. I am grateful to the reader for his contribution.
Among other differences, an autonomousCentral Bank is free to use the mechanisms at its disposal to control inflation – one of its principal functions – in accordance with the government’s policy objectives.
An independent Central Bank can actually set its own monetary policy objectives and its own inflation targets.
In yesterday’s announcement of the decision of the Monetary Policy Committee to keep the Selic rate of 14.25%, it appears that the third characteristic cited in the referenced blog post on the 20th – i.e. obedient – is what prevailed anyway.
The article did clear up my confusion as to the difference between the two terms in the context of central banking but created some additional confusion as to what are the policy objectives of the administration!
Can’t win ‘em all, I guess!
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