Independence daze

US Treasury refrains from commenting on Fed's policies to assure it independence

At a function organised by the Confederation of Indian Industry in New Delhi yesterday, US Treasury Secretary Tim Geithner was asked a question from the floor about the future, presumably contractionary, effects on the US economy when the Federal Reserve’s quantitative easing was withdrawn. Geithner refused to answer the question. He said it was a “fine tradition” that no member of the US Treasury or executive commented at all on monetary policy decisions or their effects, and that it was an essential part of ensuring the independence of the central bank. In India, the Reserve Bank of India is also technically independent, but New Delhi apparently has a very different view on whether commenting on monetary policy affects the independence of Mint Road.