The weakened Fed is increasingly friendless

THESE are worrying days for the Federal Reserve, America's central bank. Surrounded by critics on the left and right, it can hardly do anything without being second-guessed or denounced. Last week, the Fed decided not to raise its target "fed funds" rate, a move that was praised by some economists but was greeted by steep drops in stock prices. This captures the Fed's precarious position: supported by some, scorned by others.

Over the past decade, there's been a profound shift in its public standing. Before the 2008-09 financial crisis, the Fed enjoyed enormous prestige and freedom of action. All the Fed had to do, it seemed, was tweak short-term interest rates to keep expansions long and recessions short. What's clear now is that we vastly exaggerated the Fed's powers of economic management.

Since 2008, the Fed has not only kept short-term interest rates near zero, but it has also poured about US$4 trillion into the economy by buying US Treasury securities and mortgage bonds (so-called "quantitative easing" or QE). These policies almost certainly helped the economy, but the extent of the help is unclear and subject to legitimate disagreement. Regardless, the recovery has been frustratingly slow.