Discuss the Unconventional Liquidity Provisions Implemented by the Fed in 2007

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The Answer is Federal Reserve has two objectives: employment and price stability. Generally, Fed focuses on the overnight interest rate to stabilize economic system but crisis of 2007-2008 called for broad and active role of Federal Reserve. Fed assumed the role of crisis protector and aggressively pursued policy which was aimed at stabilizing economy.
Federal Reserve move was unprecedented. It tried to lower down long run interest rate by purchasing toxic assets from market. It infused liquidity in market and spurred purchasing power. It was called quantitative easing. Quantitative easing was last resort since interest rate was already near zero, thus, it could not be lowered down further. Quantitative easing was unconventional form of monetary policy.
References:

Federal Reserve, Economic Projections of Federal Reserve Board Members and Federal Reserve Bank Presidents, December 2013.
Janet Yellen, “Challenges Confronting Monetary Policy,” speech at the 2013 National Association for Business Economics Policy Conference, Washington, DC, March 4, 2013, http://www.federalreserve.gov/newsevents/sp
Testimony of Fed Chairman Ben Bernanke, in U.S. Congress, House Committee on Financial Services,

Discuss the Unconventional Liquidity Provisions Implemented by the Fed in 2007

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Discuss the Unconventional Liquidity Provisions Implemented by the Fed in 2007

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