The Fed’s accommodative monetary policy response has been intended to ease the effects of the recession and support a recovery in the context of its dual mandate to foster maximum employment and stable prices. As the economy descended into recession, the Federal Reserve promptly and aggressively pushed the federal funds rate down to near zero.
The Fed then substantially expanded its holdings of longer-term securities and more recently moved to lengthen the average maturity of its holdings to put downward pressure on longerterm interest rates. These actions were intended to help bring down both short-term and longer-term interest rates, thereby reducing borrowing costs for households and firms.