In short, the low level of the federal funds rate not withstanding, broad monetary conditions have already begun to normalize, a development that should tend to limit future inflation risks. Of course, at some point the FOMC will have to validate the general expectation of rising short-term rates; expectations management is not an independent tool of monetary policy.
In an alternative scenario, we ask what would happen if the implementation of these corrective measures were delayed by five years (i.e., over our projection horizon), after which time they are allowed to kick in. In other words, this alternative scenario eventually course corrects and is by no means as bad as it can be.