Coronavirus is doing major damage across the globe, especially in the West. Countries are shutting down one after another as the virus spreads. The death toll is increasing, but more than deaths from the virus itself, the problems will be bigger from the economic meltdown.
Central banks and governments are doing all they can, but this looks worse than the 2008-09 crisis. The FED lowered interest rates considerably earlier this month and started a QE programme, now they are adding more to the stimulus package.
- Will buy Treasuries, MBS in the amounts needed to ensure smooth market functioning and transmission of monetary policy
- Establishes two new facilities for large employers
- One facility is for new bond, loan issuance; one is for outstanding corporate bonds
- Establishes term asset-backed loan facility (TALF)
- TALF backed by student, auto, credit card and business loans among other financial products
- Will soon announce ‘main street business lending program’ to support SMEs
- Daily and term repo rates to be reset to offering rate of 0%
So, a lot of action from the FED to help the economy on top of the federal government measures. Some of these policies we haven’t even heard about before. But again, if people get stuck inside, there are no monetary or fiscal measures to help the economy. Anyway, let’s hope for the best.