The Committee indicated its intention to hold short-term rates near zero at least as long as unemployment remains above 6.5 percent, provided inflation one- to two-years ahead is projected to be no higher than 2.5 percent.4 3And under the current flow-based LSAP program, adopted last year, we are purchasing $ billion a month in long-term Treasury securities and agency mortgage-backed securities (MBS).
Although the level of purchases may vary depending on economic conditions, the program will continue until there is a substantial improvement in the outlook for the labor market, in a context of price stability. I see the first tool, forward guidance about rates, as really an extension of traditional central bank rate-setting policy.