Transcripts of the monetary policymaking body of the Federal Reserve from 2002–2008.

No, they don’t know that you are more likely to reverse course in that case. So when you think of a communication strategy, which is not in these simulations, it says, “Oh, we’re going to do this, but in the event that the recession doesn’t occur, we will take it away more quickly than we might have based on historical averages.” But it doesn’t make too much difference in the simulation, because it is taken quickly. Just because the funds rate is down surprisingly low for a quarter or two, that is not long enough to have much of an effect on long-run inflation expectations in that simulation. What it would do in the real world is different.

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