Ben Bernanke

Why the interest rate debate has gotten so odd

Contrary to many people's expectations, the Federal Reserve refrained last month from raising the interest rate over which it has fairly direct control. That means we can expect several more months of debate over (I'll simplify slightly) whether the world will end if the Fed raises rates too soon, or if it waits too long. There are two odd things about this debate. The first is that proponents of an interest-rate increase generally treat it as an end in itself. The second is that a tiny increase in the federal funds rate should be thought to be so important either way. Typically, the central bank raises interest rates to tame inflation. But the inflation rate has run below...