Abstract
This paper examines central bank credibility in the context of its financial strength, independence, and global market uncertainty in five Southeast Asian countries between 2005 and 2023. We find that the global market risk indicated by VIX reveals that these Southeast Asian economies, despite achieving considerable central bank independence and institutional development, remain fundamentally constrained by global market conditions in maintaining their credibility, measured by the difference between the inflation rate and its target in the same year. We argue that in emerging economies exposed to global uncertainty, central bank profitability, conditional on its independence, is vital for central banks with weak capital adequacy to perform their duties in achieving price stability through monetary channels.