Thus, the substantial decline in longer-term yields following this announcement appears to have mainly reflected the effect of the purchases in pushing down term premiums rather than a shift in the expected path of the funds rate. 5 This evidence suggests that the portfolio balance channel of influence is not only operative but also fairly large.
That said, as we saw in figure 2, the expected path of the federal funds rate does appear to have flattened for a time during the late summer and early autumn of last year.