The dual objectives of price stability and maximum employment are generally complementary. Indeed, at present, with the unemployment rate elevated and the inflation outlook subdued, the Committee judges that sustaining a highly accommodative stance for monetary policy is consistent with promoting both objectives. However, in cases where these objectives are not complementary, the Committee follows a balanced approach in promoting them, taking into account the magnitudes of the deviations of inflation and employment from levels judged to be consistent with the dual mandate, as well as the potentially different time horizons over which employment and inflation are projected to return to such levels.

If we want to slow the stock market in terms of technology stocks, or slow the housing industry, we don't have tools for doing that. We have tools, a blunt instrument, that impacts economic activity six to eight months out and impacts inflation 18 months to two years out, so targeting it to a specific industry is just very complicated.

From audience Q&A as reported by Market News International

Empirical estimates of the lag between a change in the funds rate and its full effect on aggregate output range from as short as one quarter to as long as a year and a half; the estimated lag in the response of inflation is also variable but tends to be somewhat more drawn out.  Some of this variability reflects differences across time in the extent to which financial markets anticipate future policy actions.  In the current episode, Federal Reserve communications have enabled investors to anticipate much of the rise in the funds rate that has occurred over the past two years and incorporate those expectations into prices in financial markets, speeding up the response fo real activity and inflation relative to a situation in which policy actions are less well anticipated.  Actual and expected increases in short-term interest rates have likely already contributed to damping some forms of interest-sensitive spending, most notably in the housing sector.

Conventional policy as practiced by the Federal Reserve has not insulated investors from downside risk. Whatever might have once been thought about the existence of a "Greenspan put," stock market investors could not have endured the experience of the last five years in the United States and concluded that they were hedged on the downside by asymmetric monetary policy.