Since December 2012, the Committee has said it intends to hold the federal funds rate near zero at least until unemployment has declined below 6-1/2 percent, provided that inflation between one and two years ahead is projected to be no more than 1/2 percentage point above the Committee’s 2 percent longer-run goal, and longer-term inflation expectations continue to be well anchored.
I believe that the clarity of this commitment to accommodation will itself support spending and employment and help to strengthen the recovery. Asset purchases have complemented our forward guidance, and the many dimensions of different purchase programs arguably constitute “many instruments.” In designing a purchase program, one must consider which assets to buy: Just Treasury securities or agency mortgage-backed securities as well? Which maturities?