When the Fed promised to hold the Fed funds rate close to zero until the end of 2014, it was:
A)carrying out what's known as operation twist.
B)carrying out what is known as credit easing.
C)following a precommitment policy.
D)following a policy that was recommended by Congress.

Question

Quizplus · Accepted Answer

The Fed's promise to hold the Fed funds rate close to zero until the end of 2014 is an example of a precommitment policy. This approach involves the central bank committing to a future course of monetary policy to influence expectations and economic behavior.

When the Fed Promised to Hold the Fed Funds Rate