The prudence of these moves in the funds rate may ultimately depend on one's diagnosis of what ails the real economy, the risk to that diagnosis, expected benefits of changes in wealth and the cost of capital to businesses and households, and the effect of a lower federal funds rate on the sum of credit availability to the real economy.
Before the crisis, capital flows were not allocated efficiently because catching-up economies lacked appropriate structural and institutional frameworks. The risks related to private debt levels were underestimated.