Accompanying the recovery So what do these various explanations imply for our monetary policy stance? The first point to make is that we face a very different situation today from the one we encountered three years ago. Then, we also faced global shocks and significant labour market slack. But the recovery was still in its infancy.
Automakers took advantage of low interest rates to offer attractive incentive deals, buoying the purchase of new vehicles. The lowest home mortgage rates in decades were a major contributor to record sales of existing residences, engendering a large extraction of cash from home equity. A significant part of that cash supported personal consumption expenditures and home improvement.