Unprecedented balance sheet expansion and near-zero overnight interest rates raise our third frequently asked question: Will the Federal Reserve’s actions to combat the crisis lead to higher inflation down the road? The answer is no; the Federal Reserve is committed to keeping inflation low and will be able to do so.
I will now turn to the non-bank financial sector and to investment funds in particular. As the market sell-off intensified in late February and early March 2020, investment funds experienced exceptionally large outflows similar in magnitude to those seen during the global financial crisis. Initially, redemptions largely centred on corporate bond funds and equity funds, while flows into safe haven assets surged.