Greater transparency is a means to better synchronize the public with policymakers and minimize the risks of undesirable economic outcomes.

Keeping the policy rate significantly and persistently below "long-run equilibrium rates" may inflate asset prices.

Must the FOMC increase its target before inflation, or will inflation increase and cause the FOMC to increase its target?

With the funds rate driven to levels far below its target, the FOMC had no recourse but to adjust the target accordingly.

The only outcome consistent with the Fisher equation holding and the FOMC’s zero interest rate policy is that the “long run” is considerably longer than 4.5 years.

The behavior of term OIS rates following the three instances of FOMC verbal guidance provides no support for the efficacy of the FOMC’s forward guidance monetary policy.

Our approach offers several advantages over LSAPs as a financial mechanism to enhance forward guidance.

Forward guidance consists of communicating to the public the stance of monetary policy that is expected to prevail in the future.

The Federal Reserve is just one of several central banks that have adopted forward guidance since the beginning of the financial crisis and in an environment of near-zero policy rates (zero lower bound).

If investment spending is sufficiently insensitive to interest rate changes and the effect of Fed actions on interest rates is sufficiently weak, the net effect of the persistent zero interest rate policy could be negative.