It was dressed up as a technical matter, but the big news of the week, affecting everyone, was arguably dramatic stuff. Which is to say it wasn’t the Opec standstill.
By any realistic reckoning the latest strategic ploy from the US Federal Reserve ramps up the financial risks, and arguably smacks of desperation. Its decision to link interest rates to unemployment data shows it believes that it can guide the real economy, as well as manage inflation, and has assumed the prerogative do so.
Washington’s preoccupation with the so-called fiscal cliff has seemingly left something of a power vacuum. Certainly the monetary authority has taken it upon itself to (literally in economic terms) take up the slack, stepping into the breach with a vengeance.
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