As the US economy recovers in fits and starts, attention is turning to exit strategies.How will the Fed unwind its quantitative easing? This column presents evidence ofsubstantial levels of policy inertia in monetary policy. It says that we should not expectrapid policy changes in the near future – barring clear signs of economic distress.

Using a large-scale survey of U.S. households during the COVID-19 pandemic, we study how new information about fiscal and monetary policy responses to the crisis affects households’ expectations. We provide random subsets of participants in the Nielsen Homescan panel with different combinations of information about the severity of the pandemic, recent actions by the Federal Reserve, stimulus measures, as well as recommendations from health officials. This experiment allows us to assess to what extent these policy announcements alter the beliefs and spending plans of households. In short, they do not, contrary to the powerful effects they have in standard macroeconomic models.