As firms’ efforts bear fruit, the public’s expectation for rising corporate profits and household income strengthens, and this will eventually lead to higher demand for the funds. In this way, accommodative financial conditions will be able to fulfill their original purpose of stimulating aggregate demand to the maximum extent.
Knowledge institutions – Open, communicative and consultative •  Power of central bank communication is striking  •  Fed – after 9/11: “The Federal Reserve System is open and operating. The discount window is open to meet liquidity needs.”  •  Those two banal sentences had remarkable calming effect on US and world financial markets. Announcement effect is stunning.