The old powerful Fed is dead

Washington

THE betting is that the US Federal Reserve won't raise interest rates at this week's meeting of the Federal Open Market Committee, its key policymaking body. There are already complaints that the Fed, which cut short-term rates to near zero in late 2008, is waiting too long to reverse low rates. Last December, the Fed increased rates by a quarter of a percentage point. It hasn't done anything since.

"The Fed will make a major mistake if it doesn't raise rates," says economist Mark Zandi of Moody's Analytics. "The job market is strong and very close to full employment. Inflation is close to target (2 per cent annually) and financial markets are in good shape." Yet, Mr Zandi doubts the Fed will raise rates by another quarter percentage point.