Right now all eyes are focused on the central banks of the world’s biggest economies and how they choose to manage the coronavirus pandemic, as stimulus is highly desirable to limit the damage that the global economy could suffer.
The Federal Reserve Bank of the United States is leading the charge in this regard. The Fed already implemented an emergency cut and announced a $1.5 trillion liquidity injection last week. Today another unscheduled cut was revealed, together with more stimulus packages. Investors still expect a deep interest rate decrease to take place during the Fed’s policy meeting on Wednesday.
Cases of the coronavirus have continued to increase in the United States. Statisticians have suggested that the numbers may actually be much higher than the official cases, because there has been an issue with a shortage of test kits and insufficient health insurance coverage, leaving many people untested, even if they had come into contact with the virus.
So far, President Trump has tested negative. In Canada, Prime Minister Justin Trudeau is under quarantine, as his wife has the virus.
The central banks of other countries are implementing measures similar to the actions of the Federal Reserve. The Reserve Bank of New Zealand and the Bank of Korea both cut rates today, while the Bank of Japan announced a stimulus package instead.
Meanwhile, economic reports for the months after the coronavirus became widespread are beginning to come to light, showing heavy damages. In China, the country most affected by Covid-19, retail sales decreased by 20% last month, while production dropped by 13.5%, worse than anticipated.
European countries are just beginning to declare emergencies and close down businesses, so the harm to the European economy will likely not be so evident in the February reports, as it would be in the March data.
The stock markets continue to suffer losses.
