That shortfall in demand will be a significant brake on the recovery. Until households and businesses are confident about future demand and income, they will be reluctant to spend and invest. The Effect of Monetary Policy Actions Fiscal policy is having the largest impact in shaping the outcomes in the economy. But the monetary policy actions are also having a material influence.
That said, at this stage in the business cycle, I believe it will be especially important to monitor a wide range of data to continually assess and calibrate the level of the policy rate that is consistent with meeting our objectives on a sustained basis.