As a reminder, the funds rate target remained between 1 and 2 percent even after the intensification of the crisis in the fall of 2008. It was reduced to its current target range of zero to ¼ percent in mid-December 2008. Relative to the depths of the crisis, conditions today are much improved from where we were 18 months ago.
Financial stress is clearly reduced and a sustainable economic recovery appears under way. It is also important to emphasize that the 1 percent fed funds rate target, coupled with the Federal Reserve’s large balance sheet, provides an extraordinarily accommodative monetary policy environment and one that would ensure the economy’s continued progress in the recovery.