March 3, 2020–Over a week into turbulence in the financial markets from a global outbreak of the coronavirus, the U.S. Federal Reserve cut its policy rate by 50 basis points amid signs that the economic outlook has “changed materially.”
Federal Reserve Chair Jerome Powell said he expects the COVID-19 virus to impact the global economy “for some time.” It has already affected tourism and travel industries and threatens to disrupt global supply chains. “The magnitude and persistence of the overall effects on the economy, however, remain highly uncertain, and the situation remains a fluid one,” Powell said on Tuesday.
Globally, the COVID-19 virus has infected at least 90,893 people across 21 countries and killed 3,110, the World Health Organization reported today.
Market Turbulence
Last week, global markets lost about 11 percent of their value while the volatility index (VIX) spiked. Today, for the first time ever, the U.S. 10-year Treasury yield dropped below 1 percent, to 0.972 percent.
IMF, World Bank, G7 Ready to Act
Meanwhile, finance representatives from G7 countries released a statement today indicating their governments may act, as needed, to adjust fiscal and monetary policies.
It follows an announcement by IMF and World leaders that the institutions would assist member countries in facing the ” human tragedy and economic challenge” that the virus poses.
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