Global Central Banks Enact Dovish Stimuli

In response to the sudden downturn caused by the coronavirus debacle across the global capital market, central banks around the world have enacted aggressive rate cuts to prevent a global economic slowdown. On Thursday (5/3) The Federal Reserves of the United States of America has announced a 50 basis points emergency rate cut to offset the financial shock from the coronavirus scare in the States. Both Goldman Sachs and ING predict further rate cuts up to 100 bps for the US central bank. Jerome Powell, Chairman of the Fed, said in a statement Friday that while the fundamentals of the US economy "remain strong," the coronavirus "poses evolving risks to economic activity”. The US central bank "will use our tools and act as appropriate to support the economy," he said.

The Central Bank of Malaysia and the Reserve Bank of Australia have also announced 25 bps cuts. Two of the countries most affected by the virus, Italy and South Korea have their banks cut rates as well, while the European Central Bank and the Bank of Japan announced additional monetary policy easing. In Indonesia, the Governor of Bank Indonesia Perry Warjiyo, announced that the bank will take intervening steps to help the economy, increasing liquidity in banking with a value of US$3,2 billion. In an unlikely move, however, the People’s Bank of China has been silent any big-bang surprise from the PBoC, which subsequently said it would not issue any “short-term stimulus” measures to boost the property sector, one the country’s most important economic engines. “Liquidity seems to be broadly ample and the financial plu