Historically, it was unusually low for a long time until it was changed again by the Federal Reserve in 2015. While the federal funds rate targeted at the zero lower bound, the Federal Reserve purchased Treasury and mortgage-backed securities (MBS) to provide additional monetary stimulus, which resulted in an enormous expansion of its balance sheet. The unprecedented financial crisis was a big challenge for the Fed to make the right decision by using monetary policy. On the January 2011, Ben S. Bernanke made a speech about his views on the economic recovery and economic policy. Although the Federal Reserve was attempting to ease the financial crisis, Bernanke thought monetary policy can do only a little to effect the U.S. economic recovery. From the implementation of monetary policy by the end of 2008 to this speech which was given in 2011, the time was too short to assess the full effect of the policy actions on the economic growth. However, he also pointed out that monetary policy is able to provide an important offset to keep the crisis from spreading. Cutting the federal funds rate was the traditional tool of monetary policy. For the purpose of putting downward pressure on longer-term interest rates, the Federal Reserve purchased mortgage-backed securities as additional monetary stimulus. It not only encouraged investors to purchase long-lasting assets such as corporate bonds and houses, but also had a moderated severe financial crisis and provided significant support to the economic growth. Alternatively, the Federal Reserve was also more transparent about the future path of monetary policy to help investors better understand policy goals. It helped
Historically, it was unusually low for a long time until it was changed again by the Federal Reserve in 2015. While the federal funds rate targeted at the zero lower bound, the Federal Reserve purchased Treasury and mortgage-backed securities (MBS) to provide additional monetary stimulus, which resulted in an enormous expansion of its balance sheet. The unprecedented financial crisis was a big challenge for the Fed to make the right decision by using monetary policy. On the January 2011, Ben S. Bernanke made a speech about his views on the economic recovery and economic policy. Although the Federal Reserve was attempting to ease the financial crisis, Bernanke thought monetary policy can do only a little to effect the U.S. economic recovery. From the implementation of monetary policy by the end of 2008 to this speech which was given in 2011, the time was too short to assess the full effect of the policy actions on the economic growth. However, he also pointed out that monetary policy is able to provide an important offset to keep the crisis from spreading. Cutting the federal funds rate was the traditional tool of monetary policy. For the purpose of putting downward pressure on longer-term interest rates, the Federal Reserve purchased mortgage-backed securities as additional monetary stimulus. It not only encouraged investors to purchase long-lasting assets such as corporate bonds and houses, but also had a moderated severe financial crisis and provided significant support to the economic growth. Alternatively, the Federal Reserve was also more transparent about the future path of monetary policy to help investors better understand policy goals. It helped