Nobel winner Joseph Stiglitz says Fed raised rates ‘too far, too fast’ — and now needs to cut big

Nobel Prize-winning economist Joseph Stiglitz says the Federal Reserve should deliver a half-point interest rate cut at its forthcoming meeting, accusing the U.S. central bank of going "too far, too fast" with monetary policy tightening and making the inflation problem worse.

His comments come ahead of Friday's pivotal release of U.S. jobs data, with investors closely monitoring the August nonfarm payrolls count for clues on the size of an expected rate cut this month. The jobs data is scheduled out at 8:30 a.m. ET.

Strategists have typically said that the most likely outcome from the Fed's Sept. 17-18 meeting is a 25-basis-point rate cut, although bets for a 50-basis-point reduction have increased in recent days.

A basis point is 0.01 percentage point.

Stiglitz, who won the Nobel Prize in 2001 for his market analysis, joins the likes of JPMorgan's chief U.S. economist in calling for a supersized rate cut this month.

"I've been criticizing the Fed for going too far, too fast," Stiglitz told CNBC's Steve Sedgwick on Friday at the annual Ambrosetti Forum held in Cernobbio, Italy.

Stiglitz said it was "really important" for the Fed to have normalized interest rates, adding that it was a mistake for the U.S. central bank to have held the benchmark borrowing rate near zero for such a long period since 2008.

"But then they went beyond that to where the interest rates have been, and I thought that put the economy at risk for very little benefit, probably actually worsening inflation, ironically, because if you looked more carefully at the sources of inflation, a big component was housing," Stiglitz said.

"If you think about, how do we deal with the problem of a housing shortage, which is increasing the price of inflation — do you think