With the forces holding down interest rates likely to persist, valuation pressures and risky corporate debt, such as leveraged lending, could well remain at elevated levels. Elevated valuations and corporate debt could leave the economy more vulnerable to negative shocks. The market volatility in December is a reminder of how sensitive markets can be to downside surprises.
We did this in full consistency with our mandate to deliver price stability, and with the determination to overcome the unfounded misunderstanding that purchases of securities could in some inexplicable way be more inflationary than the use of the same securities in regular repurchase agreements. What counts, of course, are the overall development of primary liquidity and the management of short-term money market rates.