The US central bank has misread both the data and its mandate
By Karen Petrou
The writer is author of ‘Engine of Inequality: The Fed and the Future of Wealth in America’
Like most central banks, the US Federal Reserve has been forced to ask why more than a decade of ultra-loose monetary policy has had such lacklustre economic results. The answer is that bad data lead to bad policy. The Fed’s data are misleading because they assume the US is the middle-class nation it has ceased to be. Until it uses data that reflect the nation as it is, the Fed will no more get America back to shared prosperity than someone using a map of New Amsterdam will find the pond in Central Park. Its inflation measures have three significant shortcomings.