With the federal funds rate already near zero, the FOMC noted, in the statement after its March meeting, "that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period." By communicating this expectation, the Committee reinforced market beliefs that policy is likely to remain on hold, and so put downward pressure on longer-term rates.
Because it is these longer-term rates that have the largest effects on spending behavior, this sort of communication can be very useful in stimulating borrowing and spending by businesses and households. In addition to easing the traditional interest rate instrument of monetary policy, the Federal Reserve has taken a range of other policy steps to ease credit conditions and support the broader economy.