The FOMC also noted, based on its assessment of these factors, “that it likely will be appropriate to keep its target federal funds rate near zero for a considerable time after the asset purchase program ends ...” I objected to this forward guidance regarding the expected timing for raising the funds rate because I believe this language is no longer appropriate or warranted.
Appropriate monetary policy must respond to the data. I believe that by indicating that the FOMC continues to anticipate that it will be a “considerable time” after the end of asset purchases before it is likely that the Committee will raise interest rates does not reflect the significant progress toward our goals. It also limits the Committee’s flexibility to take action going forward.