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General TradingF
Fiscal Dominance
Fiscal dominance occurs when a government's fiscal policy (spending and taxation) effectively overrides or constrains the central bank's monetary policy. It can lead to inflationary pressure when central banks are forced to accommodate large government deficits.
Example
“With government debt-to-GDP exceeding 120%, many economists argued the country had entered fiscal dominance — the central bank couldn't raise rates aggressively without making the government's interest payments unsustainable.”