They never unwound. The two main tools of monetary policy are the federal funds rate (FFR) and the assets side of the Fed's balance sheet. The FFR started to r

They never unwound. The two main tools of monetary policy are the federal funds rate (FFR) and the assets side of the Fed's balance sheet. The FFR started to rise in 2016 but never reached 'normal' levels before declining again in July of last year.[1][2] The balance sheet started shrinking in 2018 but only managed to reach 2013 levels before expanding again in Q4 last year.[3] All the while, the FOMC has been talking about "policy normalization", but they've punted on it again and again.[4][5] It's not clear what kind of event we're seeing now or how much they'll be able to help. It's not even clear how much they helped last time. Counterfactuals are hard. Edit: There's also the IORR rate, which Bernanke created in the last crisis.[6] As such, there's no historical 'normal' for it (other than zero, perhaps). I've never seen an economist even claim to understand what's going on with IORR -- and not claiming to understand something is a big deal for economists. [1] https://fred.stlouisfed.org/graph/?g=qkTu https://fred.stlouisfed.org/graph/?g=qkTu [2] https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS [3] https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm https://www.federalreserve.gov/monetarypolicy/bst_recenttren... [4] https://www.federalreserve.gov/monetarypolicy/policy-normalization-discussions-communications-history.htm https://www.federalreserve.gov/monetarypolicy/policy-normali... [5] https://www.federalreserve.gov/monetarypolicy/policy-normalization-qa.htm https://www.federalreserve.gov/monetarypolicy/policy-normali... [6] https://fred.stlouisfed.org/series/IORR https://fred.stlouisfed.org/series/IORR