With US interest rates now virtually zero, the Federal Reserve is deploying a range of new and unorthodox tools. But its objectives remain the same: to limit the severity of the recession, and over time achieve low unemployment and price stability.

The Fed can still stimulate the economy by reducing the actual borrowing costs facing households and companies. These remain high even though the so-called Federal funds rate set by the Fed – the rate banks charge to lend each other surplus reserves overnight – is now fixed in a range from zero to 0.25 per cent.