As shown in Figure 1, over the past two decades, the Fed has set the federal funds rate, a key gauge of the stance of monetary policy, in a fairly consistent fashion relative to various economic indicators such as unemployment and inflation. (Figure 1 shows the quarterly average funds rate and unemployment rate, and the four-quarter inflation rate for prices of core personal consumption expenditures. See the related data file.) During the current and two previous recessions—around 1991, 2001, and 2008—the Fed responded to large jumps in unemployment with aggressive cuts in the funds rate. In addition, episodes of lower inflation also were generally associated with a lower funds rate.