This was the prevailing view despite the fact that the U.S. economy was growing at a 3.2 percent annual rate and the global economy’s average growth was nearly 3.6 percent. In addition, the fed funds policy rate was 1 ¼ percent.
Although most  2  BIS central bankers’ speeches  knew that such a low rate would support an expanding economy, in June 2003 it was lowered further to 1 percent and was left at that rate for nearly a year, as insurance. Following this action, the United States and the world began an extended credit expansion and housing boom.