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Justin Wolfers

Bernanke Can't Just Rewrite the Past Three Months

The decision has surprised markets. It shouldn’t have.

So, the Fed got it right. The so-called taperis off. That is, the Federal Open Market Committee decided to follow its stated policy of continuing to increase monetary stimulus while the labor market remains sick. The decision has surprised markets. It shouldn't have.

Think about it. We're at a moment when inflation is well below the Fed's inflation target, unemployment remains unconscionably high, Congress is threatening to either shut down the government or default, and the recovery is faltering. There is simply no sensible approach to monetary policy that would suggest that this was the moment to take your foot off the gas.