Tokyo Kuroda, President of the Bank of Japan, took the lead on Monday in promising to take action as needed to stabilize the market hit by the new coronavirus epidemic. Later in the day, European Central Bank President Lagarde also followed up with a similar statement. On Friday, Powell promised that the Fed would act in a timely manner to support the U.S. economy.
"We stand ready to take the necessary appropriate and targeted measures commensurate with the potential risks," European president Lagarde said in a statement.
The reassurance provided by the leaders of the three central banks was the main catalyst for Monday's rally in global stock markets. With the situation that the epidemic could not be controlled in China becoming more and more obvious, the global stock market fell continuously at the end of February.
Powell, Kuroda and Lagarde will also hold a conference call with finance ministers of the group of seven (G7) and other central bank presidents on Tuesday to discuss countermeasures against the spread of the new crown. The outbreak has spread to 60 countries, killing more than 3000 people and damaging the global supply chain.
What and when they will take action is still unknown, especially considering that the current policy instruments of the three major central banks are few. Among the three major central banks, only the Federal Reserve's policy interest rate is still above zero, and the balance sheets of the three central banks total more than $14 trillion.
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