Conversely, if the outlook for the economy unexpectedly worsens, the public should expect a later “liftoff” in rates – an expectation that would reduce longer-term interest rates and thereby provide more-accommodative financial conditions.
Communication and monetary policy challenges ahead The threshold guidance for the federal funds rate looks ahead to a time when the economy has healed from the worst effects of the financial crisis. Getting back to more normal economic conditions will allow for a more normal approach to monetary policy.