How did we respond to our diagnosis? In the face of these risks, we did precisely what any central bank would have done: we acted to restore transmission and bring down the average borrowing costs paid by households and firms to levels more consistent with the intended stance of our policy.
This was the philosophy underlying our credit easing package that we adopted between June and October this year. The transmission mechanism we wanted to activate – the bank lending channel – was quite simple and, I would add, orthodox in its underlying logic.