The discussion of where the economy is headed brings us to our second question: What has the Federal Reserve been doing to support the economy and the financial system?
The Federal Reserve has been, and still is, doing a great deal to foster financial stability and to spur recovery in jobs and economic activity.3 Notably, we began the process of easing monetary policy in September 2007, shortly after the crisis began. By mid-December 2008, our target rate was effectively as low as it could go–within a range of 0 to 1/4 percent, compared with 5-1/4 percent before the crisis–and we have maintained that very low rate for the past year. Our efforts to support the economy have gone well beyond conventional monetary policy, however. I have already alluded to the Federal Reserve’s close cooperation with the Treasury, the Federal Deposit Insurance Corporation (FDIC), and other domestic and foreign authorities in a concerted and ultimately successful effort to stabilize the global banking system, which verged on collapse following the extraordinary events of September and October 2008. We subsequently took strong measures, independently or in conjunction wit
