Thank you for the question. This is a very important point.
If you'll permit me, sir, to go back to this time last year, when we reached the zero lower bound or the effective zero lower bound--25 basis points--for technical reasons we couldn't see the interest rate going any lower than that. We felt that given the level of activity abroad and in Canada, and the perspectives for inflation, in order to achieve our inflation target, we needed more monetary stimulus.
At that point, we were faced with a choice. Other central banks have been faced with this choice. The first step they took was to “quantitative ease”—to print money, colloquially speaking—or to “credit ease”, which was to purchase securities.
We provided a policy. First off, we wanted to have a policy that was rooted in principles and that was transparent. We were fortunate that we were able to put that out and come to this committee immediately afterward and explain ourselves. And we saw a third option. We had those two options, and we continue to have those two options if needed, but the third option was to provide extraordinary guidance on the path of interest rates. That's why we gave the conditional commitment.
So to your point about what we got as monetary stimulus out of that, what we got was a movement in the short end of the yield curve from the overnight rate out to the end of June, 2010, a movement down. Over the course of the year, as we've reiterated that commitment, that bit of the yield curve has been anchored. Those are important yields for a variety of prices, which have eased financial conditions in Canada, including for prime rate borrowing, as discussed earlier.
So by removing that commitment, even though the amount of time left in that commitment was relatively short, it gave a corresponding adjustment to those expectations, which removed some of the monetary stimulus that was there. That was an unconventional policy. It was done for extraordinary times. Our message is that those extraordinary times—not difficult times, but extraordinary times—have passed or are passing, so it was appropriate to remove that, and that was the monetary stimulus that we have taken out.