Central Banks Line Up to Rescue Markets: Asia Times

Financial markets fell sharply during the second week of March, rivaling the 1987 plunge. Central banks try to stabilize economic systems hit by the health crisis of COVID-19. “Expectations of fiscal support measures are rising in addition to the deep rate cuts by various central banks already included in bond prices,” explains Umesh Desai for Asia Times, describing how a new series of liquidity injections stalled a freefall for various stock indices. “China unleashed a wall of liquidity by cutting the reserve requirement ratio (RRR) by 50-100 basis points (bps) on Friday, which will release 550 billion yuan into the banking system.” The goal of rate cuts, such as those from central banks in South Korea and Norway, is to encourage more cheap debt and spending. Some analysts question rate cuts, suggesting banks should focus on fiscal measures that lift confidence even as governments ban large gatherings, consumers prepare for quarantines and businesses expect a rough patch. Reducing interest rates and capital requirements reduce banking tools for fending off severe financial crisis. UPDATE: The US Federal Reserve reduced its federal funds rate on Sunday. – YaleGlobal

Central Banks Line Up to Rescue Markets: Asia Times

Central banks apply fast intervention, and global markets try to recover after a week of dramatic falls in global stock markets
Umesh Desai
Sunday, March 15, 2020

Read the article from Asia Times about central banks’ efforts to stabilize economies.

Also read the article from Reuters about the US Federal Reserve, reducing the federal funds rate to 0 to .25 percent.

 Last-ditch rate for member borrowing, higher than the fed funds rate   Fiscal Policy controls how the government spending and revenue through taxation

(Source: The Balance)

© 2020 ASIA TIMES.

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