5  At the time the FOMC was purchasing an additional $ billion a month of longer-dated Treasury securities while selling an equivalent amount of shorter-dated securities under the Maturity Extension Program. 6  While we specified a current monthly pace of purchases the degree of stimulus depends mainly on expectations for the ultimate size of purchases and how long we are expected to hold the assets that we have acquired. 7  This was made clear in the FOMC statement that the Committee expected to reach the unemployment rate threshold at the same time as the earlier date guidance. BIS central bankers’ speeches  3  make it clear that short-term rates will not be raised at the first sign of economic improvement, before a sustainable recovery has been secured. As a result, households and businesses should be more confident in undertaking additional spending and investment today. The shift to thresholds-based rate guidance has other benefits. Relative to calendar-based guidance, it provides more information about the economic conditions the Fed would need to see before raising rates.8 Importantly, the shift to thresholds should also make the eventual normalization of monetary policy smoother, a subject I will return to later. But this raises an obvious question. If quantitative thresholds are good for interest rate guidance, why not also have such thresholds for the asset purchase program? There are two reasons.
We have a diverse audience with well-known experts on Islamic finance and market participants who, I am sure, will provide us with a fruitful encounter. Let me thank the IE again for hosting the event and the IFSB and Mr. Jaseem Ahmed for bringing this initiative to Madrid. I wish you all a very successful Forum. 2  BIS central bankers’ speeches