These alternative policy tools included large-scale purchases of longer-term Treasury and mortgage-backed securities for the Federal Reserve’s portfolio and enhanced communication about its anticipated future policy, or “forward guidance,” regarding the likely path of the federal funds rate. Large-scale asset purchases provided additional monetary accommodation by putting downward pressure on longer-term interest rates through a portfolio-balance channel.
First used in November 2008, the Federal Open Market Committee (FOMC) subsequently initiated a series of purchase programs during the next several years and, in September 2012, implemented an open-ended program that would continue until there was a substantial improvement in the outlook for the labor market.