Yellen must set the route back to normalcy

THE US Federal Reserve has been criticised for ending the zero interest rate era. Indeed, its minuscule rise in December has been blamed for the stock market jitters. I hold the opposite view. The Fed took too long to raise rates and then raised them by too little.

Janet Yellen has invoked China as one of the variables the Fed must examine in setting interest rates. The Fed chair's statement is good news. But China-watching can go too far. The problem is at home, in the US heartland.

The crisis of inflated asset values has been coming for some time. The upheaval may have been hastened by the Fed or the price collapses in Shanghai. But the answer is not to stop or reverse the rate rise as some people are saying - talking even of negative interest rates in the US as well as Europe. Instead, Ms Yellen must continue firmly to lay out a route map back to normalcy.