But it is also a blunt instrument that has a wide set of intended but also unintended consequences that can and have worsened economic outcomes including misallocation of precious resources, inflation and long-term unemployment. That is why we want to return to a sustainable long-term equilibrium policy rate, starting soon. The economy is improving and policy should reflect that fact, carefully but confidently.
Although we find ourselves in a unique environment, history offers us some important lessons. If we do not learn from past mistakes, we will find ourselves repeating them yet again. 4  BIS Review 88/2010