Thus, I voted against replacing maturing MBSs with similar or other securities. Finally, in the fall, I questioned the long-term benefits of further easing monetary policy during a recovery – and I voted against QE2. Today, my view has not changed. The FOMC should gradually allow its $ trillion balance sheet to shrink toward its pre-crisis level of $ trillion.
It should move the U.S. federal funds rate off of zero and toward 1 percent within a fairly short period of time. Then, after evaluating the effects of those actions, it should be prepared to move the funds rate further toward a level that could be reasonably judged as closer to normal and sustainable. I recognize that these actions are not simple to implement.