How can the central bank credibly implement a ``lower-for-longer'' strategy? To answer this question, we analyze a series of optimal sustainable policy problems---indexed by the duration of reputational loss---in a sticky-price model with an effective lower bound (ELB) constraint on nominal...

We examine how private sector agents might learn a new monetary strategy that is adopted while at the ELB. Little can be discovered until the economy improves enough that rates would be near liftoff under the old strategy. Recessionary shocks would thus delay learning while large inflationary...