But ending the net purchases is just the first step on a multiyear path towards monetary policy normalisation. And that’s precisely why it’s so important to actually get the ball rolling soon. Normalising monetary policy in this way will give policymakers greater leeway to respond to any economic slumps in the future – because the current upswing won’t last forever.
It’s not hard to find historical examples: The outlook for real activity shifted dramatically from late 1998, when overseas turmoil was thought to jeopardize U.S. growth, to early 1999, when it became clear that the effects would be minimal and activity was accelerating.