Undoubtedly, the FOMC will choose a strategy that does not fit neatly into any box, but these considerations will likely play a role in our deliberations. Some observers argue that the Federal Reserve has already been too patient.
They are concerned that continued policy accommodation is distorting interest rates and asset prices and encouraging a build-up of debt, and thereby laying the groundwork for financial and economic instability. Clearly, the low funds rate has held down long-term interest rates and boosted asset prices. These movements are, in fact, some of the key channels through which monetary policy has stimulated demand.