Central banks in Korea and New Zealand have followed the Fed’s lead by cutting interest rates
Central banks are not known for their spontaneity. They do not tear up their calendars lightly. And when they do, it is not usually a good sign. Both the Bank of Japan and America’s Federal Reserve were scheduled to hold policy meetings later this week. But neither felt they could wait that long.
If that was all it needed to do, it could probably have waited until its regular meeting on March 17th and 18th. But it also faced a more urgent problem in two of the most important financial markets in the world: those for mortgage-backed securities and American Treasury notes. In times of crisis, such as recessions, wars or today’s covid-19 pandemic, investors flock to American Treasuries as a safe haven, driving their prices up and their yields down .
Will further measures be necessary? Certainly these ones failed to restore immediate calm to the markets. Following falls in stockmarkets across Asia and Europe on March 16th, the Dow Jones Industrial Average fell by an astonishing 13% and the S&P 500 index by 12%. After all, Mr Powell himself had pointed out that the economy was likely to shrink in the second quarter, as firms and people hunker down to avoid infection.
The Bank of Japan cannot afford to be so particular. It introduced negative interest rates more than four years ago and has been buying equities, through exchange-traded funds , for even longer. Although Japan has been more successful than Europe or America in slowing the spread of the covid-19 virus, its economy was already shrinking before the epidemic emerged.
México Últimas Noticias, México Titulares
Similar News:También puedes leer noticias similares a ésta que hemos recopilado de otras fuentes de noticias.
The Federal Reserve acts again: can it soothe the markets?To soothe the markets, the Fed will purchase at least $500bn of Treasuries and $200bn of mortgage-backed securities
Leer más »
Stocks crumble, unconvinced as Fed and peers attempt radical rescueStock markets and the dollar were roiled on Monday after the Federal Reserve sla...
Leer más »
Credit market pain won't end until Washington puts more muscle into stimulusThe Federal Reserve blasted markets with a big dose of liquidity and zero interest rates, but credit markets remain stressed and are looking for more help.
Leer más »
Dow falls 2,200 points, trading halted, as rate cut fails to calm marketsBREAKING: Dow falls 2,200+ points at Monday open as rate cut fails to calm markets amid global coronavirus concerns.
Leer más »
Wall Street Heads For Heavy Losses As Global Coronavirus Cases Overtake ChinaThe Federal Reserve's emergency measures announced over the weekend have given investors little confidence with Monday marking another major stock market sell off.
Leer más »
Bank of Japan Rolls Out Measures to Blunt Coronavirus ImpactThe Bank of Japan responded to the Federal Reserve’s rate cut with measures to pump money into the Tokyo stock market and the economy after they were battered by the coronavirus pandemic.
Leer más »