Moreover, it is worth repeating a point made earlier: whatever direct hydraulic effects LSAPs create by pushing down term premiums and discount rates, their overall impact may be reinforced via a signaling effect, whereby they enhance the credibility of our forward guidance about the future path of the federal funds rate.
Indeed, this signaling benefit strikes me as an important part of the argument in favor of LSAPs in the current environment. Let me turn now to the cost side of the equation. Several potential costs of LSAPs have been discussed.