As the crisis precipitated, it had a dramatic impact on commodity, particularly energy, prices, which then helped inflation move rapidly down, along with other drivers. This, in turn, provided the basis of for a quick and large reversal in the monetary stance. As Slide 6 shows, both policy rates and the cash reserve ratio were significantly reduced over a relatively short period of time.
But when interest rates are already low and private demand is constrained by design – as is the case today – the transmission from financing conditions to private spending might be attenuated.