As a consequence of weak output, declining employment, and a decrease in core inflation to a low level, the Federal Reserve eased policy aggressively. The intended funds rate fell from 6-1/2 percent in late 2000 to less than 2 percent in late 2001, and then to just 1 percent by the middle of 2003.
Macroprudential surveillance assesses current risks by looking at the broad economic and financial conditions that can contribute to the buildup of risks to the financial system and the economy as a whole. Macroprudential regulation seeks to improve the resiliency of the financial system by designing standards and codes to limit the buildup of financial and economic imbalances.