The Fed is also going to take on banks' excess reserves as a sort of CD, giving them a nominal interest rate in return. Put together, these plans should "drain hundreds of billions of dollars of reserves from the banking system quite quickly," Bernanke wrote.
Unfortunately, as we saw yesterday, bank liquidity might not be the foremost of our problems, and these moves might affect just the far edges of the economy. The big question is, when does Bernanke foresee that he will raise interest rates from the current near-zero level? "At some point," he wrote. It would be easy to ridicule such a lack of specificity, but better to admit that you don't know when the economy will improve enough to warrant such a move rather than to lock yourself in to an unknowable target. At least we know interest rates will remain zero for some time yet. At least until the snow lets up.