The downside of a cap is that it would be difficult, perhaps in practice impossible, to determine the optimal rate or spread that should serve as a cap, particularly since the optimal cap would vary with bond market and macroeconomic conditions. A fixed cap might harshly punish all banking organizations unnecessarily when the bond market is highly illiquid.
By being transparent about the signs we’re watching, we are trying to help financial markets make their own judgments about the economy’s prospects. These opinions are important because they serve as a useful check on our own analysis. It has been a long voyage, and it isn’t over yet.