Let's pause here and note what this moment represented. For the first time, the [Federal Open Market] Committee was using communication-mere words-as its primary monetary policy tool. Until then, it was probably common to think of communication about future policy as something that supplemented the setting of the federal funds rate. In this case, communication was an independent and effective tool for influencing the economy. The FOMC had journeyed from "never explain" to a point where sometimes the explanation is the policy. - Janet L. Yellen'
In late 2008, as the full impact the Global Financial Crisis would have on the United States economy remained painfully unclear, the Board of Governors of the Federal Reserve System faced a difficult dilemma. The economy was continuing to contract at a dizzying pace. The already dramatic growth in unemployment showed no sign of abating-and looked like it might well be accelerating. Yet the Fed's primary-if not exclusive-tool for intervention was no longer available to it. The Fed had already reduced its target for the federal funds rate to zero, and further opportunity for monetary stimulus seemed out of reach.
Ahdieh, Robert B.
"From Fedspeak to Forward Guidance: Regulatory Dimensions of Central Bank Communications,"
Georgia Law Review: Vol. 50:
1, Article 10.
Available at: https://digitalcommons.law.uga.edu/glr/vol50/iss1/10