Lower mortgage rates are one reason for the improvement we have been seeing in the housing market, which in turn is benefiting the economy more broadly. Other important interest rates, such as corporate bond rates and rates on auto loans, have also come down.
Lower interest rates also put upward pressure on the prices of assets, such as stocks and homes, providing further impetus to household and business spending. The second monetary policy tool we have been using involves communicating our expectations for how long the short-term interest rate will remain exceptionally low.