The difference between short- and long-term rates, otherwise known as the yield curve, is close to historic highs, even though long-term rates have fallen remorselessly over recent years.
The flows into risk-free assets by central banks and private investors has plunged returns on these assets into negative territory, and pushed investors out along the risk curve into assets that are close substitutes to risk-free assets (such as investment grade U.S. corporate bonds).
It is unnatural to have interest rates close to zero and to distort the yield curve by pegging longer-run bond prices at artificially high levels and suppressing yields.
Pegging the federal funds rate close to zero for another three years and twisting the yield curve to lower longer-term rates will continue to misprice credit, penalize saving, and encourage risk.