Annual Survey | Monetary Policy Strives For Normalcy

Global Finance grades the world’s central bank governors on how well they have performed in the past year.

After flooding the world with liquidity for the past decade, a growing number of central bankers in advanced economies are seeking a path back to dry land. Higher interest rates are needed to restore normalcy, in part so that rates can be lowered once again if another financial crisis hits. While few major economies exhibit exuberant growth, central bankers are a cautious lot; they like to take the punch bowl away just as the party is getting good—before it gets out of hand.

For 23 years, Global Finance has been grading central bankers on how well they do their jobs. Our ratings are largely based on inflation control, economic growth, currency stability and interest-rate management. Other factors taken into account are central bankers’ skills in supervising financial institutions and their determination to protect their independence in the face of political pressure.

In her speech at the gathering of central bankers in Jackson Hole, Wyoming, in August, Federal Reserve chair Janet Yellen discussed the financial reforms policymakers in the US and around the world have made to limit both the probability and adverse consequences of future financial crises. “The balance of research suggests that the core reforms we have put in place have substantially boosted resilience without unduly limiting credit availability or economic growth,” Yellen said. Sooner or later, she added, the system will revert to irrational exuberance and excessive leverage, but “in new ways that will require policy responses.”

In this year’s report cards, we rate the performance of 83 central bank governors. While it is too early to grade the seven rookie central bankers who were installed most recently, Global Finance assessed the remaining governors on a scale ranging from A for head of the class to F for outright failure. We have added nine countries this year: Democratic Republic of Congo, Dominican Republic, El Salvador, Honduras, Jamaica, Myanmar, Nepal, Nicaragua and Tanzania.

Emerging-market central banks may be more likely to lower rather than raise rates in the months ahead, as inflation remains subdued, according to economists at Capital Economics. In emerging Europe and Latin America, core inflation has been falling, as spare capacity in those regions’ largest economies—Russia and Brazil—has kept prices down. Inflation is likely to be at or below central bank targets in most emerging markets over the remainder of the year, Capital Economics forecasts. The firm’s aggregate measure of emerging-market inflation is at an eight-year low of 3%.

Global growth is indeed picking up, yet signs of inflation are lacking in both wages and energy prices. Asset inflation has soared, however, with a huge boost from central bank purchases of $12 trillion, mainly in government bonds, in response to the financial crisis. Unwinding these massive positions will be done gradually over time to avoid triggering market declines—such as the Taper Tantrum in the summer of 2013, after the Federal Reserve announced it would begin reducing its purchases of bonds and mortgage-backed securities.

Meanwhile, “with monetary policy globally very expansionary, regulators should be wary of rekindling the incentives that led to the [financial] crisis,” Mario Draghi, president of the European Central Bank, said at Jackson Hole. “When monetary policy is accommodative, lax regulation runs the risk of stoking financial imbalances.”

“The global recovery is firming up,” Draghi said, adding that in Europe and Japan, “the consolidation of the recovery is at an earlier stage” than in the US. He gave no indication of when the ECB would end the eurozone’s $2 trillion bond-buying program.

Here are the tables for Central Bank Governors for how they fared in 2017 versus 2016 by region 

THE AMERICAS
Country	Central Bank Governor	2017	2016
Argentina	Federico Sturzenegger	B-	B
Bolivia	Pablo Ramos Sánchez	B+	B+**
Brazil	Ilan Goldfajn	A-	Too early to say
Canada	Stephen Poloz	B+	B-
Chile	Mario Marcel	B	B**
Colombia	Juan José Echavarría	B	B+**
Costa Rica	Olivier Castro Pérez	B+	B+
Dominican Republic	Héctor Valdez Albizu	A-	N/A*
Ecuador	Verónica Artola	Too early to say	B**
El Salvador	Oscar Cabrera Melgar	B+	N/A*
Guatemala	Sergio Francisco Recinos Rivera	B	C**
Honduras	Manuel de Jesús Bautista	A	N/A*
Jamaica	Brian Wynter	B	N/A*
Mexico	Agustín Carstens	B	A-
Nicaragua	Leonardo Ovidio Reyes Ramírez	B+	N/A*
Paraguay	Carlos Fernández Valdovinos	A	A
Peru	Julio Velarde Flores	B+	A
United States	Janet Yellen	A	A-
Uruguay	Mario Bergara	B+	B+
Venezuela	Ricardo Sanguino	F	F**

EUROPE
Belarus	Pavel Kallaur	C	C
Bulgaria	Dimitar Radev	B	B
Czech Republic	Jií Rusnok	C	Too early to say
Denmark	Lars Rohde	B	B+
European Union	Mario Draghi	B+	B+
Hungary	György Matolcsy	D	C
Iceland	Már Guömundsson	B	B
Norway	Øystein Olsen	B	B
Poland	Adam Glapiski	C	Too early to say
Romania	Mugur Isrescu	C	B
Russia	Elvira Nabiullina	A	A
Sweden	Stefan Ingves	B+	B
Switzerland	Thomas Jordan	B-	B
Turkey	Murat Çetinkaya	B	Too early to say
Ukraine	Yakiv Smolii (Acting)	Too early to say	B+**
UK	Mark Carney	B	A

ASIA-PACIFIC
Australia	Philip Lowe	A	Too early to say
Azerbaijan	Elman Rustamov	C	D
Bangladesh	Fazle Kabir	B	Too early to say
China	Zhou Xiaochuan	C+	C
Hong Kong	Norman Chan	B-	B
India	Urjit Patel	B+	Too early to say
Indonesia	Agus Martowardojo	B	B
Japan	Haruhiko Kuroda	B+	B
Kazakhstan	Daniyar Akishev	B	C
Malaysia	Muhammad Ibrahim	B+	Too early to say
Myanmar	Kyaw Kyaw Maung	C+	N/A*
Nepal	Chiranjivi Nepal	C+	N/A*
New Zealand	Grant Spencer (Acting)	Too early to say	B**
Pakistan	Tariq Bajwa	Too early to say	B**
Philippines	Nestor Espenilla Jr	Too early to say	A**
Singapore	Ravi Menon	B-	B-
South Korea	Lee Ju-yeol	B	B+
Sri Lanka	Indrajit Coomaraswamy	B+	Too early to say
Taiwan	Fai-Nan Perng	A	A
Thailand	Veerathai Santiprabhob	C+	B-
Uzbekistan	Mamarizo Nurmuratov	Too early to say	C**
Vietnam	Lê Minh Hung	B-	Too early to say

MIDDLE EAST & AFRICA
Algeria	Mohamed Loukal	B-	Too early to say
Angola	Valter Filipe Duarte da Silva	B-	Too early to say
Bahrain	Rasheed Mohammed Al Maraj	C	B-
Botswana	Moses Pelaelo	B+	B**
DR Congo	Deogratias Mutombo Mwana Nyembo	C-	N/A*
Egypt	Tarek Amer	B+	C
Ethiopia	Teklewold Atnafu	B	B
Ghana	Ernest Addison	Too early to say	Too early to say**
Iraq	Ali Mohsen Ismail	D	C
Israel	Karnit Flug	A	A
Jordan	Ziad Fariz	A-	A-
Kenya	Patrick Njoroge	B-	B+
Kuwait	Mohammad Yousef Al Hashel	B+	B-
Lebanon	Riad Salameh	A	A
Morocco	Abdellatif Jouahri	A	A-
Namibia	Ipumbu Wendelinus Shiimi	B-	B
Nigeria	Godwin Emefiele	D	B-
Oman	Hamood Sangour Al Zadjali	B	B
Qatar	Abdulla Bin Saoud Al Thani	B	B
Saudi Arabia	Ahmed Alkholifey	B+	Too early to say
South Africa	Lesetja Kganyago	C	B
Tanzania	Benno Ndulu	C	N/A*
Tunisia	Chédli Ayari	B	B
Uganda	Emmanuel Tumusiime-Mutebile	C+	B-
UAE	Mubarak Rashed Al Mansoori	B+	B+