UNITED STATES (OBSERVATORY NEWS) — The European Central Bank (ECB) was the last to hint at monetary policy actions in an effort to mitigate the potential economic impact of the outbreak of Chinese coronavirus, CNBC reports.
“We remain vigilant and will closely monitor all incoming data. Our future leadership will determine our monetary policy,” said ECB Vice President Luis de Guindos in a speech in London.
“In any case, the governing council is ready to adjust all its instruments accordingly to ensure a steady movement of inflation towards its goal,” he said.
This statement was made after a series of comments by central bank executives around the world that indicated that a coordinated global monetary response to the coronavirus epidemic is possible.
Stock markets in major economies experienced the worst week after the financial crisis, as concerns about a global recession intensified due to the rapid spread of the virus outside of China.
Beijing has already lowered its base rates in an effort to withstand the effects of the coronavirus outbreak: the People’s Bank of China has lowered the basic rate on loans by one year from 4.15% to 4.05%, and the five-year rate from 4.8% to 4.75%.
Jerome Powell, chairman of the US Federal Reserve System, issued a statement on Friday in which he reiterated that “the fundamentals of the US economy remain strong,” the coronavirus poses “developing risks to the country’s economic activity”.
“We will use our tools and act accordingly to support the economy,” Powell added.
The market is currently forecasting the Fed to fall by 50 basis points (0.5%) at the March meeting of the Federal Open Market Committee (FOMC) and decrease by 100 basis points (1%) by the end of 2020.
The current range from 1.5% to 1.75% has been maintained since the end of 2019 after three consecutive reductions over the past year.
Haruhiko Kuroda, head of the Bank of Japan, said Monday that the central bank “will seek to stabilize markets and offer sufficient liquidity through market operations and asset purchases.”
Bank of England outgoing manager Mark Carney said earlier that the UK should prepare for lower economic growth, warning that supply chains are “getting a little tense.”
This article is written and prepared by our foreign editors writing for OBSERVATORY NEWS from different countries around the world – material edited and published by OBSERVATORY staff in our newsroom.
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