, Columnist
The Fed’s Interest Rate Target Is Obsolete
There’s a better way to manage monetary policy.
Let it go.
Photo: Fox Photos/Getty Images
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The U.S. Federal Reserve’s interest-rate decisions have big repercussions for the country and the world. Yet the short-term interest rate it targets — known as the federal funds rate — no longer plays a meaningful role in the economy, and requires occasional fiddling to keep it in line.
The simple solution: Drop the target.