Central Banks/Inflation: The big powers want restraint from the little ones

If Jay Powell was the most powerful central banker in the world, you wouldn’t know it by his paycheck. Even the worst-paid chairman is not in a position to lecture workers about curbing wage demands, even though inflation-related adjustments have deeply annoyed central bankers.

Powell earns the same $226,000 salary as the Secretary of State, the attorney general and other top officials. That’s modest compared to its central bank counterparts, not to mention the roughly $100 million JPMorgan Chase President Jamie Dimon received last year. But it’s double the average wage in the United States. Powell would be an ear tin if he called on workers to tighten their belts.

Andrew Bailey of the Bank of England sparked a storm in February when he advised workers to rein in wage demands, especially when he later told MPs he did not remember his exact salary. His base salary is £495,000 or $730,000 at purchasing power parity exchange rates.

This puts Bailey near the top of the central banker’s payroll. Thomas Jordan of the Swiss National Bank is the highest paid in face value, having raised nearly $1 million last year. However, Switzerland is an expensive place to live. If salary is measured as a multiple of median income, Jordan slips behind Bailey.

At the top of the rankings using this scale was Ignazio Visco of the Bank of Italy, who earned nearly 18 times the Italian worker’s average. This was the case even after Mario Draghi’s efforts to curb excessive wages when he ran the bank until 2011.

Agustín Carstens of the BIS presses in the middle of the pack. The Bank for International Settlements, the central bank, is particularly concerned about workers protecting living standards through index-linked wage deals.

The wage index is less common than in the past. As well as union membership. These factors reduce the risk of a self-reinforcing wage-price spiral. But labor markets are tight. Firms with pricing power will be able to pass on wage increases to customers. Central bankers who want to earn what they have left need to solve this puzzle, rather than discipline workers who demand more.

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