Will the budget deal be a game changer for the Fed?

IN HIS recently published memoir, former US Federal Reserve chairman Ben Bernanke explained that he had never expected that the aggressive monetary policy that the central bank was pursuing under his stewardship since the 2008 financial crisis could lead the ailing American economy into the promised land of full recovery.

The reason that the economy failed to move ahead in full force has been the lack of an activist fiscal policy to supplement the forceful actions taken by the Fed, including the steps to lower the Fed's benchmark rates to zero coupled with the quantitative easing (QE).

And the main culprit in Mr Bernanke's narrative has been Congress, that has rejected various proposals to stimulate the economy through new government spending programmes.