First, the depth of the recession, combined with ongoing concerns about the functioning of the financial system, raised significant uncertainties about both the likely pace of recovery and the effectiveness of monetary policy in supporting growth.
The recoveries from most post-World War II U.S. recessions had been relatively rapid, with production, unemployment, and other key variables returning to close to normal levels within six to eight quarters. In such cases, the policy horizon most relevant to financial markets might be the next several quarters.