In the decades when the Phillips curve was steeper, inflation tended to rise as the economy heated up, which would prompt the Committee to raise interest rates to restrictive levels. These interest rate increases would have the effect of tightening financial conditions more broadly, thereby naturally damping financial imbalances as the expansion extends.
With trend inflation persistently below target and a flat Phillips curve, not only is the policy rate expected be low for long due to the decline in the neutral rate, but the policy rate may also remain below the neutral rate for longer in order to move inflation back to target sustainably.