The Fed's growing activism has limits

How risky is the Fed's major move?

By Mohamed A. El-Erian

Wow! That is what I suspect many investors said when they heard Wednesday's policy announcement from the Federal Reserve. And this single reaction would have captured not just partial surprise but also a combination of conflicting feelings.

Have no doubt: Yesterday's Fed announcement will go down in the history books -- at least those texts covering central banking and monetary policy. It marks a major evolution in the activism, involvement and aspirations of the central bank. It is also a risky move, taking the institution much deeper into experimental and politically charged territory.

The Fed took two major steps on Wednesday, one expected and one less so.

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