These decisions had the appearance of watershed moments – we had never before made purchasing government bonds a central tool of monetary policy, 1 nor had we provided accounts of our monetary policy meetings. But both decisions were in fact the logical extension of our monetary and communication policies over several years, and in particular when our interest rates reached the effective lower bound.
With interest rates at the lower bound, both the tools and the communication of monetary policy have to change. Asset purchases become the logical next step to expand the monetary policy stance; and enhancing transparency becomes the logical way to steer expectations and ensure accountability in an unprecedented new environment.