In response to continuing low levels of resource utilization, the FOMC has kept monetary policy highly accommodative by keeping its primary policy instrument, the federal funds rate, at an exceptionally low level; by supplementing this move with forward guidance about the funds rate; and by initiating unconventional policy actions such as large-scale asset purchases.
One channel through which these policies operate is by putting downward pressure on longer-term interest rates, thereby encouraging firms to invest in plants and equipment and helping enable households to purchase cars and other durable goods and also to refinance their mortgages. Lower interest rates also support the prices of homes and other assets, which can lead to additional spending.