US Fed reduction of monetary stimulus would be premature, Stiglitz says

Nobel Prize-winning economist says to accept cuurent economic conditions “as the new normal would be really wrong”

Nobel Prize-winning economist Joseph Stiglitz said it would be premature for the Federal Reserve to reduce monetary stimulus even if there’s little evidence it helped the world’s largest economy.

“It’s the only stimulus,” the Columbia University professor said in an interview at the World Economic Forum in Jordan.

“Clearly the economy is not back to normal, and to accept this as the new normal would be really wrong.”

US stocks dropped and treasuries fell for a fourth week, the longest slide since August, after Fed chairman Ben Bernanke said the Fed may cut the pace of asset purchases if policymakers see indications of sustained growth. Orders for durable goods increased more than forecast in April, signalling a lift later in the year for the US economy. – (Bloomberg)