The amount of outstanding bank loans in the private sector has recently showed an increase, though at a very moderate pace (Chart 8). During the previous QE period, it was viewed that banks’ lending activities remained sluggish mainly because of the balance sheet problems of banks and firms.
Following the 11 September 2001 terrorist attacks in the United States, the Bank of Canada quickly and aggressively cut its policy interest rate to shore up confidence and support domestic demand. By the spring of 2002, evidence had already started to build that demand was growing faster than the economy's production capacity. Monetary policy actions must always be forward looking.