4 The FOMC used both forward guidance and balance sheet policies in response to the financial crisis. Some observers argue that forward guidance and asset purchases fully offset the shortfall in policy accommodation caused by a lack of space to cut interest rates further, so that the limits on the Fed’s policy rate did not ultimately constrain our policy response to the financial crisis.
The new instrument could finance common projects of an exceptional nature or help with the macroeconomic stabilization of the European area in response to a shock of a certain size.