By tightening monetary policy, the aim is to avoid the development of an upward spiral in consumer prices and wages. Such a wage-price spiral would be a sign that inflation expectations have become de-anchored.
By easing conditions in credit and financial markets, these actions encourage spending by households and businesses through essentially the same channels as conventional monetary policy, thereby supporting the economic recovery. A wide range of market indicators supports the view that the Federal Reserve’s securities purchases have been effective at easing financial conditions.