March 11, 2020
Fed Faces Zero Rate Debate With Wall Street Split on Timing
“At the height of last summer, New York Federal Reserve President John Williams temporarily roiled markets when he argued that central banks running low interest rates should act boldly to inoculate their economies against unfolding ailments. “When you only have so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress,” he said in a speech that the New York Fed later clarified was not meant to be a policy signal. You want to “vaccinate against further ills.” ”
BOE Cuts Rates in Coordination With Treasury Virus Response
“The Bank of England unveiled stimulus including its first emergency interest-rate cut since the financial crisis, a move coordinated with the government’s fiscal response to prevent the coronavirus outbreak from crippling Britain’s economy. Policy makers delivered a half-point reduction to take their key rate to 0.25%, introduced a new program to provide easy and cheap credit, and reduced a special capital buffer to give banks even more room to lend. Governor Mark Carney said the virus effect should be short-lived, but he and his successor, Andrew Bailey, made clear that the BOE has space if it needs to do even more.”
Japan’s Abe Faces Rising Calls for More Stimulus After Emergency Measures
“Prime Minister Shinzo Abe still faces calls to put together another large-scale stimulus to shake off the impact of the coronavirus, despite a second round of emergency measures unveiled Tuesday. Most economists see the world’s third-largest economy falling into recession despite the two rounds of measures aimed at helping struggling businesses and workers. With the virus keeping schools shut, shoppers at home and tourists away, many analysts also see the economy shrinking over the span of 2020.”
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