I suggest that these changes in asset demand and asset supply are likely to persist over a considerable period of time – possibly the next five years or so. It follows that the FOMC will only be able to meet its objectives over that time frame by taking policy actions that ensure that real interest rates remain unusually low.
I then point out that low real interest rates are often associated with financial market phenomena that are seen as signifying instability. It follows that, for many years to come, the FOMC will only be able to achieve its congressionally mandated objectives by following policies that may result in signs of financial market instability.