Political Pressure on Central Banks & Strong U.S. Growth

The debate over central bank independence and accountability has returned to the world stage, after former UK Prime Minister Liz Truss warned of a “reckoning coming” for central banks. Her comments arrived alongside signs of unexpectedly strong U.S. economic growth, raising fresh questions about monetary power, political influence, and the role of technology in the recovery.

Speaking about the state of monetary policy, Liz Truss said there is a “reckoning coming” for central banks, arguing that these institutions wield too much influence without sufficient checks and balances. Her remarks echoed support for Donald Trump’s calls to exert greater control over the U.S. Federal Reserve, reflecting a growing political challenge to the traditional independence of central banks.

For decades, central banks in major economies have operated with a degree of autonomy, setting interest rates and managing the money supply to protect financial stability. Critics such as Truss and Trump argue these institutions are not sufficiently accountable to the public, especially when their decisions affect inflation, wages, and the cost of living.

The controversy comes amid surprising U.S. economic strength. The U.S. Commerce Department revised second-quarter GDP growth to 3.3%, well above initial estimates. Analysts link much of the improvement to heavy investment in artificial intelligence (AI), which is boosting productivity across sectors including manufacturing, finance, healthcare, and tech services.

Companies are increasingly adopting AI tools to reduce costs, improve efficiency, and develop new products. This surge in capital spending in the tech sector has helped lift overall economic output, and some economists compare AI’s potential impact to the transformative effect personal computing had in the 1990s.

At the heart of Truss’s warning is whether central banks have become too powerful. In the U.S., Federal Reserve decisions on interest rates and inflation control affect millions of households, yet Fed leadership is not elected. In the UK, the Bank of England has faced criticism over its handling of inflation, which reached multi-decade highs before cooling.

Truss argues that unchecked central-bank power can lead to decisions that harm ordinary citizens. Trump has suggested he would seek greater influence over the Fed if re-elected. Defenders of independence warn that political interference risks destabilizing markets, reducing investor confidence, and turning monetary policy into a political tool rather than a stabilizing force.

While AI investment is powering U.S. GDP, experts caution it brings risks. Heavy reliance on a single growth driver could leave the economy exposed if promised gains fail to materialize or regulatory hurdles slow adoption. Moreover, AI-driven gains are uneven: large corporations and tech hubs capture most benefits, while smaller firms and rural communities lag behind.

That disparity raises questions about whether AI-led growth will broadly lift living standards or deepen existing inequalities. Some economists argue that policymakers and central banks may eventually need to consider how technological change reshapes labor markets, wages, and inflation dynamics.

The debate over central-bank independence and AI-fueled growth has global consequences. International markets react to shifts in U.S. monetary policy, and any perception of weakened independence could spark volatility. The UK’s post-Brexit economic challenges make Truss’s criticisms especially pointed as policymakers contend with inflation and slow growth.

For emerging economies, strong U.S. demand driven by AI offers both opportunities and risks: exports may rise, but tighter global monetary conditions linked to inflation control can raise borrowing costs and strain countries dependent on foreign debt.

As political leaders call for greater accountability and central banks defend their independence, tensions are likely to increase. Both the Federal Reserve and the Bank of England face important policy choices in the coming months. Investors, businesses, and households will be watching closely as technology-driven growth reshapes economic dynamics and the debate over who should control monetary levers intensifies.

For now, the U.S. economy’s 3.3% GDP growth suggests resilience, but the political struggle over monetary authority may help determine the next chapter in global finance.