stop of asset purchases. but concerns about financial market functioning, including the ability of markets to absorb the purchases the fed stops making, typically limits how fast the tapering can be, particularly given the amount of asset purchases we were making at the time ( $ 120 billion per month ). given the tapering criteria and subsequent data, we ultimately had to pivot hard to accelerate the tapering pace and, in fact, completed the tapering of purchases just a few - 8days before we lifted off. unlike the normalization timeline after the financial crisis, we did not have flexibility to raise the target range sooner. however, if we had less restrictive tapering criteria and had started tapering sooner, the committee could have had more flexibility on when to begin raising rates. 6 so, by requiring substantial further progress toward maximum employment to even begin the process of tightening policy, one might argue that it locked the committee into holding the policy rate at the zero lower bound longer than was optimal. my takeaway is that a less restrictive tapering criteria would have allowed more flexibility to taper “ sooner and gradually, ’ as opposed to the relatively “ later and faster ” approach that occurred. experience has shown that markets need time to adjust to a turn from accommodation to tightening, and that surely was a factor for fomc statements over the years in framing criteria for key policy actions during the recovery from the gfc and the pandemic. so, i ’ m supportive of issuing such criteria but we need to be careful to use language that allows the committee the flexibility it needs to respond to changing economic and financial conditions. now let ’ s turn to the liftoff criteria. it was also quite restrictive. the liftoff criteria required the economy to be in a situation where our dual mandate had been achieved. it can be argued that this meant getting the economy back to its 2019 state with very low unemployment and inflation near 2 percent. but the policy rate in 2019 was well above zero and close to its neutral value. consequently, if the state of the economy there are a couple of reasons why a less restrictive tapering criteria can create more policy space. first, a less restrictive tapering criteria allows policymakers to reduce the amount of purchases, perhaps more than once or even potentially end purchases, all while a more restrictive criteria may not even be triggered. second, if policymakers believe that market functioning considerations constrain the dollar amount that fed purchases can be reduced in a given month, then a policy

the orderly functioning of money markets as well as the flow of credit to employers. the board responded with a set of emergency lending facilities that, collectively supported the flow of credit throughout the economy both by providing backstops and, in some cases, by more directly supplying funding. future downturns are unlikely to see the same global, sharp, and intense demand for liquidity, and thus not warrant the same kind of emergency lending. for more details on the fed ’ s facilities to support households, businesses, and municipalities during the covid crisis see the november 2020 financial stability report at financial stability report ( federalreserve. gov ) - 3programs were decommissioned around year end. perhaps the most straightforward takeaway for monetary policy is that in times of severe stress, lending facilities, along with sharp cuts to the federal funds rate and the introduction of large - scale asset purchases, are very effective in reviving the economy. there are some other lessons, i think, from the experience of tightening monetary policy, a process which was put in motion by the guidance that the fomc issued in 2020 about how long it would keep the federal funds rate at the effective lower bound and continue asset purchases. in september and december of 2020, the fomc provided criteria or conditions in the meeting statement that would need to be met before the fomc would consider raising interest rates and begin to reduce asset purchases, respectively. these conditions were, in effect, the fomc ’ s plan for starting the process of tightening policy. this guidance was short term, specific to the task of when to tighten policy in this current cycle, and focused on specific tools. let me make an important distinction here. a bit earlier, in august 2020, the committee completed a multi - year review of our overall strategy for achieving and sustaining our economic goals. the strategy statement is very different than the tightening guidance — it is about longer - run goals, not specific actions related to the current circumstances. the goals in the strategy statement apply in all economic circumstances and don ’ t include any details on the settings of policy tools. i mention this distinction because some have argued that the fomc ’ s new strategy was a factor that led the committee to wait too long to begin tightening monetary policy. a bit later, i will explain why i do not believe this is the case, and i will explain how the guidance for - 4tightening policy, laid out in the fomc ’ s post - meeting statements