Central Bank Independence and Monetary Policy Effectiveness in the Middle East, Central Asia and Caucasus

Author: Mr. Dmitry Gershenson, Omer Faruk Akbal, Mohamed Belkhir, Rhea Gupta, Mr. Koba Gvenetadze, Mr. Ashraf Khan, Fei Liu, Antonio Manzanera, Nasir H Rao, Umang Rawat, Xiaoqiao Shen, and Mr. Subir Lall

The first comprehensive study of central bank independence (CBI) and inflation in ME&CA countries using a new dataset and in-depth analyses. It finds that greater CBI is linked to lower inflation, with the relationship strengthening over time—especially in ME&CA economies.

Volume/Issue: Volume 2026 Issue 009

Publication date: June 2026

ISBN: 9798229041515

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Topics covered in this book

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Banks and Banking , Finance , Inflation , Economics- Macroeconomics , Money and Monetary Policy , central bank independence , inflation , monetary policy , macroeconomic resilience , Middle East , Central Asia and Caucasus , cbi reform , IMF team , cbi Subindices , inflation outcome , cbi momentum , cbi reference , IMF tool , Central bank autonomy , Monetary policy frameworks , Central bank legislation , Central bank organization , Price stabilization , Central Asia , Middle East and Central Asia , Asia and Pacific , North Africa

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Summary

The subject of central bank independence (CBI) remains a keenly debated topic even decades into its adoption in a growing number of countries. CBI has recently come under renewed scrutiny, including in the Middle East and Central Asia (ME&CA) countries, as pressures for monetary policy to accommodate fiscal needs have intensified. To better inform the debate around CBI, this paper provides the first comprehensive analysis of its role in managing inflation including when subject to shocks, a key indicator on the effectiveness of monetary policies, in ME&CA countries using a novel data set and country deep dives. It further identifies institutional strengths and weaknesses of CBI in ME&CA countries and offers tailored policy recommendations to strengthen CBI.