Concerted Central banks action: reduction in interest rates against Virus-follow

The world economy is suffering from the Coronavirus. The US Central Bank lowers the key interest rate. The stock prices rose, but only briefly. More money due

Concerted Central banks action: reduction in interest rates against Virus-follow

The world economy is suffering from the Coronavirus. The US Central Bank lowers the key interest rate. The stock prices rose, but only briefly.

More money due to Corona – but viruses please free photo: Zhong Min/cost / photo/dpa

BERLIN taz | Central banks around the globe fresh money ready to release to the markets in times of pandemic-give a new impetus to. "The Central banks of the G7 are committed to their responsibility for growth and the resilience of the financial system to comply with", according to the U.S. Department of the Treasury. It had organized on Tuesday a conference of the Finance Ministers and monetary authorities of the seven G7 economies.

Shortly thereafter, the head of the American Central Bank, Jerome Powell responded, already with an interest rate reduction of 0.5 percentage points. This is remarkable, because Powell was even Recently determined that a normalisation of interest rates at a higher level to work.

The Japanese Central Bank had already announced to observe the "further development and sufficient liquidity" position. As the level of interest rates, not lower, reacted to the Bank with the purchase of government bonds to the value of four billion euros. So it pumps money into the financial system.

the Bank of England has promised, meanwhile, to take "all necessary measures to support the economy of the United Kingdom". The Central banks of Australia and Malaysia have reduced their rates already. The new Boss of the European Central Bank (ECB), Christine Lagarde, has also indicated their willingness to help.

Economists will consider a loosening of monetary policy is currently appropriate. "It would be a support for the financial market," says Birgit Henseler, an analyst at DZ Bank. The impact on the real economy will be according to their evaluation, however, limits – after all, money is already since 2009, very cheap. The ECB is buying, also, routinely, as the Bank of Japan, bonds in the market. In order to flush money into the System each month about 20 billion Euro. In addition, they punished banks that want to Park money at the Central Bank, with the fees to keep the funds instead in circulation.

Birgit Henseler, DZ Bank

"Germany will be particularly affected"

What would have once been extremely Central in exceptional times, is today the normal state. In these times, it is difficult for an effect to trigger. Analyst Henseler believes it is still possible to send positive signals. The ECB could, for example, doubling the bond purchases by 20 billion to 40 billion euros. Or you could raise the Penalty rate for money banks for your Parking, more.

Lagarde would have to be for a monetary policy response to the Virus, however, consensus in the governing Council. In the Council, the governors of the Central banks of the Euro-zone seats, plus the Directors of the ECB. Federal Bank chief, Jens Weidmann, has a voice. He is regarded as an opponent of an ever-larger release of Central Bank money. "The governing Council of the ECB must not lose sight of the exit from the loose monetary policy from the point of view," he said only at the end of last week – although he had previously reflected the risks posed by the new Virus.

The Economist of DZ Bank see in the new Coronavirus is quite a serious danger for the world economy. In the most likely scenario, the global growth this year is around one percentage point lower than previously expected. When the crisis hits faster and stronger on the economy then can be lost in the forecast, according to two percentage points of growth. "Germany would be affected particularly strongly," says Henseler. "It has a very open, globally networked economy, and the supply depends heavily on the Export and from the Work the chains."

Joint actions of Central banks and Finance Ministers against the economic problems there were in the past. In 1968, Central bankers got together to form a "concerted action" to combat threats to the former currency system.

In the year 1987, they have tried to crash the Dollar to stop. In the European monetary system, the precursor of the Euro, they were almost the rule, in order to keep the exchange rates. Spectacular is the common interest rate cuts after the financial crisis of 2008. Since then, the interest rates are hanging around the globe in the cellar.

Date Of Update: 03 March 2020, 19:00

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