Indeed, in our September and subsequent FOMC statements, we indicated that we expect it will be appropriate to keep the federal funds rate in the current 0 to 25 basis point target range until inflation has reached 2 percent (on an annual basis) and labor market conditions have reached levels consistent with the Committee’s assessment of maximum employment.
For instance, central banks might threaten future economic and financial stability if they keep policy rates too low for too long in the aftermath of a crisis.8 In the context of the present crisis, the risk of missing the right time to exit from unconventional monetary policy measures offers a case in point.