Liquidity disappeared from markets, as participants sought to protect their own liquidity by increasing their cash holdings. Amid the uncertainty, credit markets began to seize up. The Bank’s priority from March to May was to restore proper functioning to financial markets so that Canadian households, businesses and governments could access credit to withstand the crisis. This should also help set the stage for recovery.
The Governing Council meetings in which we discuss the quarterly ECB/Eurosystem staff projections have an important role here. But it is important to note that this does not limit our flexibility to adjust purchase volumes in the period between meetings. If market conditions require, the pace and composition of purchases can be flexibly adjusted in both directions at any time.