4 Before the Great Recession, textbooks used to say that once the central bank interest rate had reached zero, monetary policy could not be made more expansionary – otherwise known as the liquidity trap. The  2  Stanford Institute for Economic Policy Research. 3  The lesson numbers in this paper are preceded by the letter “T” for Toronto.
6 Nevertheless, the September FOMC statement noted that the economy had made progress toward the Committee’s goals and that, if progress continued, it would soon be time to taper. 7 Up until October, monthly core personal consumption expenditures (PCE) inflation was actually slowing. As shown in Figure 1, it went from 0.62 percent in April to 0.24 percent for the month of September.