There was a time, in the aftermath of the financial crisis, when central bankers were “the only game in town”. In a book with that title, published in January 2016, the economist Mohamed El-Erian warned that, with their exotic crisis-fighting measures — zero interest rates, quantitative easing, forward guidance — the central bankers risked overreaching.
This was prescient. Three years on, the men and women who make monetary policy are very far from the only game in town. Now they’re the ones being gamed.
On Wednesday, the Federal Reserve’s chairman, Jerome “Jay” Powell, explained at a press conference why he and his colleagues had decided to cut US interest rates by a quarter of a percentage point. Given that America’s economy is still growing at…