Since the Federal Reserve began using a variety of monetary tools to stabilize the financial system soon after the start of the historic 2007 recession, it has implemented programs to restart economic growth and keep interest rates low.
Its most historic and dramatic program was to significantly reduce the federal funds target rate to effectively zero, where it has remained for almost seven years, since December 2008. The Fed also engaged in a quantitative easing program — more commonly referred to as “QE” — in which it made a series of multibillion-dollar purchases of long-term government bonds and other securities.
The three rounds of QE began in 2008, 2010 and 2012 and pushed the benchmark 10-year Treasury yield down from 4.7 percent at the start of 2007 to 1.9 percent at the end of 2011.
The Fed ended 2014 saying it would be patient in raising interest rates from the near-zero record lows. While the Fed has said it will start raising its benchmark federal funds rate once further improvements are seen in the labor market and inflation rises back to its 2 percent goal, the decision to do so has been delayed and is now most likely to occur in December.
The Fed’s announcement on September 24 that it would not raise interest rates was controversial, and it had a definite impact on the average American.
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