How does a central bank normalize monetary policy after a long spell of unusually low interest rates? This may seem like a question very much of the present, as Fed leaders ponder interest-rate policy following the Great Recession of 2007- 2009 and the tepid U.S. recovery. But it’s also a challenge the Fed confronted two decades ago. In 1994, the Federal Open Market Committee (FOMC) wrestled with a similar dilemma as it considered emerging from a sustained period of low interest rates, amid signs of a reviving economy, growing aggregate demand, and no obvious signals of inflation.

The Richmond Fedeal Reserve reports Emerging from Low Interest Rates