For most of 1991 Federal Reserve lets short-term interest rates continue to drift downward while it waits and sees what this relaxation of monetary policy will do to the economy. But long-term rates don't move. Long-term rates an average of future short rates. Past members of the Federal Reserve Open Market Committee have compared the making of monetary policy to that of driving a car with the windshield painted black by looking in the rear-view mirror. Because shifting the IS curve out moves you up the LM curve.
Interest rates rise.
We saw this in chapter 3. Here it is, back again, in an abbreviated form. And there is a monetary policy term.