President Lacker, I would say that there are a number of strategies that the Committee could think about if it were at the point that it felt it couldn’t lower the federal funds rate any further, be that zero or some higher level. One would be communications that suggest to market participants a willingness to hold short-term rates at very low levels for a very long period of time. Of course, one could view the 2003 experience as implementing that strategy with the “considerable period” language. But obviously the idea is to try to hold down the longer-term rates that matter for spending to a larger degree than might be implied by market participants’ views that you might instead begin to firm monetary policy sooner.
There are a number of other possibilities. As you suggest, one would be simply to expand the Federal Reserve’s balance sheet further—engage in a sort of quantitative easing. The effectiveness of that could be debated. Another possibility that was discussed, at least in the period in which the studies were done, would be to change the composition of the Federal Reserve’s balance sheet. Of course, we’ve already done a lot of that with the various lending facilities, and so the scope for additional expansion there would need to be thought through.