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The 2020–2024 period placed unconventional monetary policy tools at the centre of policy. Forward guidance and large-scale asset purchases were deployed forcefully and were then confronted by a rapid recovery and a sharp inflation surge. This paper synthesises the literature through that episode, focusing on the Federal Reserve. We revisit the background literature on forward guidance and asset purchases, focusing on issues that became central after 2020: state dependence, transmission under stress, and the design challenges that arise when conditions change unexpectedly. The episode yielded new transmission evidence—especially on asset purchases—but its main lessons concern policy design. The Fed’s 2020 policy package embedded too little flexibility once the outlook shifted, though likely with modest effects on inflation itself. More generally, unconventional policy faces a commitment–flexibility trade-off, suggesting that guidance conditions and purchase programmes should be stress tested across alternative states of the world before deployment.
