As oil prices and the dollar stabilize, the drag on consumer price inflation from these sources ought to dissipate, and inflation will likely move closer to 2 percent. This projection, however, depends critically on expectations for future inflation remaining reasonably well anchored; as the FOMC has noted, low readings for some indicators of expected inflation deserve close watching.
Some general observations It is important to recognize at the outset that conventional and unconventional monetary policy actions bear many similarities. Forward guidance concerning the path of the federal funds rate, for example, is explicitly intended to influence market expectations concerning the future trajectory of shorter-term interest rates and thereby affect longer-term interest rates.