The Fed's chaotic monetary policy

The policy of the US central bank Federal Reserve (Fed) of considerably reducing the base interest rate has missed its target, the Nobel Prize-winning economist Joseph E. Stiglitz writes in the business paper Diário Económico: "The Fed, captured for more than two decades by market fundamentalists and Wall Street interests, not only failed to impose restraints, but acted as cheerleaders. And, having played a central role in creating the current mess, it is now trying to regain face. ... The best that can be said for monetary policy over the last few years is that it prevented the direst outcomes that could have followed Lehman Brothers' collapse. But no one would claim that lowering short-term interest rates spurred investment. Indeed, business lending - particularly to small businesses - in both the US and Europe remains markedly below pre-crisis levels. The Fed and the European Central Bank have done nothing about this."

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