Central bankers get political

The spread of extremism is posing a challenge to the neutrality of central bankers [View in browser]( [Bloomberg]( Welcome to Balance of Power, bringing you the latest in global politics. If you haven’t yet, sign up [here](. Central bankers usually stay out of politics, and for good reason. For starters, they like politicians to stay out of central banking. More importantly, they need those politicians — and their promise of institutional independence — to serve as a buffer against voters. Now all that has started to change. As Jana Randow [writes](, European Central Bank President Christine Lagarde, a former French finance minister, broke the taboo by warning about the dangers of a US election win for Donald Trump. Bundesbank board member Sabine Mauderer arguably went further when she appeared at an anti-extremist rally in Frankfurt. The German central bank’s president, Joachim Nagel, and ECB Executive Board Member Isabel Schnabel, who is also German, have joined similar demonstrations as the establishment wrestles with the rise in support for the far-right AfD. The spread of extremism poses a challenge to such institutions in many countries: How far should they veer from political neutrality in the face of policies they consider a threat to their economies — or simply just objectionable? With Trump accused of inciting a coup attempt in 2021 rather than cede power, opponents including in the Republican Party warn he’s a danger to US democracy. Germany’s AfD, which has [discussed the mass deportation of migrants](, consistently polls above 20% nationally even as critics warn its rise carries parallels with the Nazis in the 1930s. That level of support, which climbs above 30% in eastern Germany, makes it more complicated for institutions like the Bundesbank to argue they’re defending democracy. As political fragmentation increases the influence of parties like the AfD, the danger for central bankers is that they get dragged into partisan battles to such an extent that it compromises their ability to deliver on their core job: keeping inflation in check. — [Ben Sills]( A protest against the AfD outside the Reichstag in Berlin on Jan. 21. Photographer: Krisztian Bocsi/Bloomberg Global Must Reads One in four people in Gaza, about 575,000 people, are [on the verge of starvation](, the United Nations said, warning the situation may deteriorate as Israel presses its offensive against Hamas. Besides the violence, aid deliveries are hindered by border closures, movement restrictions and “onerous” vetting procedures by Israel, said Ramesh Rajasingham, coordination director of the UN’s humanitarian office. Palestinian children gather to receive food at a school in Rafah on Feb. 19. Photographer: Mohammed Abed/AFP/Getty Images Ukrainian President Volodymyr Zelenskiy discussed his peace formula for ending Russia’s invasion [at talks]( with Saudi Crown Prince Mohammed Bin Salman in Riyadh yesterday. While Zelenskiy said Saudi Arabia’s leadership “may help find fair solutions,” there was no immediate sign of progress on a global summit Kyiv is seeking in support of his plan, which requires Russian forces to withdraw from all Ukrainian territory. US President Joe Biden and Republican frontrunner Trump cruised to victory in their parties’ primary elections in Michigan, a key battleground state, but there were signs of [discontent for the likely nominees](. While critics urged Democrats to either sit out the contest or cast “uncommitted” ballots to protest Biden’s handling of the Israel-Hamas war, votes for Nikki Haley suggested a sizable portion of the Republican electorate takes a dim view of Trump. Armenia and Azerbaijan begin two days of peace talks hosted by Germany today aimed at resolving their [decades-long conflict](. The meeting in Berlin follows talks between German Chancellor Olaf Scholz, Armenian Prime Minister Nikol Pashinyan and Azerbaijani President Ilham Aliyev at this month’s Munich Security Conference. The South Caucasus neighbors have fought repeated wars over Nagorno-Karabakh since the Soviet Union collapsed more than three decades ago. President Javier Milei’s prescription of shock therapy for Argentina’s crisis-prone economy [looks to be at risk]( as opposition grows to his sweeping decree among regional representatives in the Senate. Governors of Argentina’s southern provinces are in an escalating dispute with the central government over the transfer of federal funds, and that’s spilling over into the upper house, where the proposal now faces a serious risk of being overturned next week. Alexey Navalny, who died in prison this month, [will be buried]( on Friday in Moscow, his spokeswoman said, as the Russian opposition leader’s wife Yulia addressed the EU Parliament in Strasbourg. Japanese Prime Minister Fumio Kishida will appear before a parliamentary ethics committee as he [seeks to turn the page]( on a ruling party slush-fund scandal that has undermined his support months ahead of a leadership vote. Political, religious and civic leaders in Senegal proposed [holding presidential elections]( in June, a recommendation that aims at ending weeks of instability in the West African nation. In a year when more than 50 countries are holding national elections, [a new study shows the risks]( posed by the rise of artificial intelligence chatbots in disseminating false, misleading or harmful information to voters. Washington Dispatch A Senate Judiciary Committee hearing today will be looking into “non-medical” deaths of inmates at federal prisons, two weeks after the release of a Justice Department [report](. The panel, according to a statement, plans to discuss contributing factors, including employee misconduct, “overuse of solitary confinement,” insufficient health care and staff shortages. Michael Horowitz, the department’s inspector general, who conducted the investigation that led to the report, and Colette Peters, the director of the Federal Bureau of Prisons, are expected to testify. Horowitz examined 344 inmate deaths at various bureau institutions in the categories of “suicide, homicide, accident, and those resulting from unknown factors,” according to a [statement]( from his office on Feb. 15. “It is deeply disturbing that today’s report found that the majority of BOP’s non-medical deaths in custody could have been prevented or mitigated by greater compliance with BOP policy, better staffing, and increased mental health and substance abuse treatment,” Senator Dick Durbin of Illinois, the committee’s chairman, said in a statement the same day. One thing to watch today: A second estimate of fourth-quarter US gross domestic product is expected to confirm annualized growth of 3.3%. [Sign up for the Washington Edition newsletter]( for more from the US capital and watch Balance of Power at 5pm ET weekdays on Bloomberg Television. Chart of the Day Breaking into the top 1% of wealth in the US is getting harder. It now takes at least $5.8 million to join the richest echelon in the world’s largest economy, almost 15% more than about 12 months ago, [according to research from Knight Frank](. Monaco retains the top spot for the highest threshold worldwide at $12.8 million, an increase of 3.2% from a year earlier, while in Luxembourg and Switzerland one needs more than $8 million to make the cut, according to the property broker’s 2024 Wealth Report. And Finally Natural hair growth supplements, garlic-smelling ointment for scorpion bites and a product called Kan Killer that promises to eliminate cancer — these were some of the wares from hundreds of medical practitioners at a global convention [dedicated to Ayurveda]( in southern India in December. Prime Minister Narendra Modi’s government is promoting a resurgence in alternative medicines, touting the practices to a foreign audience and supporting conventions like this one in the state of Kerala. The Global Ayurveda Festival in Kerala in December. Photographer: Prashanth Vishwanathan/Bloomberg More from Bloomberg - [Bloomberg Opinion]( for a roundup of our most vital opinions on business, politics, economics, tech and more - [Next Africa](, a twice-weekly newsletter on where the continent stands now — and where it’s headed - Check out our [Bloomberg Investigates]( film series about untold stories and unraveled mysteries - [Economics Daily]( for what the changing landscape means for policy makers, investors and you - [Green Daily]( for the latest in climate news, zero-emission tech and green finance - Explore more newsletters at [Bloomberg.com](. Follow Us Like getting this newsletter? [Subscribe to Bloomberg.com]( for unlimited access to trusted, data-driven journalism and subscriber-only insights. Want to sponsor this newsletter? [Get in touch here](. You received this message because you are subscribed to Bloomberg's Balance of Power newsletter. 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