last Friday, at the end of a week in which stock markets around the world had been plagued by the uncertainty of the coronavirus, and has fallen at an average annual rate of 13 percent – are sent to the Federal Reserve, an unspoken, but nevertheless clear, signals.
the Announcement came in a brief statement issued by the central bank governor Jerome Powell, who, as mentioned, the risk is that the coronavirus poses to the economy.
In two sentences, he tried to then inspire confidence.
”the Fed is closely following the developments and their implications for the outlook for the economy. We are going to use the tools and act in an appropriate manner, in order to prop up the economy.
the temporary to the size of the falls in global stock markets. The New York stock exchange, which was around the zero mark for the opening. The stockholm stock exchange ranged between a plus and a minus for the day.
“ the question is whether it’s the Fed’s job is to keep the stock prices up, as the courses had gone up a lot in the recent past. However, I don’t think that was what it was all about. The central bank wanted to send out a signal value of the rest of the economy, in order to show that, in these difficult times, we are with you, “ says Annika Winsth, chief economist at the Bank.
Annika Winsth, chief economist at the Bank. Photo: Magnus Hallgren
So when the Fed meets the next time the 17-18th of march, there is a general expectation of a cut in interest rates.
they have gone ahead and predict three rate cuts in the united states, on a total of 75 basis points in the month of June.
What this leads to, if modest, cuts in interest rates by the Fed, even if they are several in number, will help to curb the worry, however, it is anybody’s guess.
There is one thing that is clear is that the march, in the year 2020 would mean a nervous wait for the world economy.
There is already a proposal, as outlined in the magazine, the Wall Street Journal’s op-ed piece, that the u.s. central bank should move to immediate action and, together, the lower the interest rate together with the European central bank and the central banks of China, England and Japan.
Other analysts believe that the akutsänkning of the interest rate before the Fed’s meeting on 17 and 18, is not necessary.
“ the Problem is that there isn’t something that you can count on. We don’t know how the infection will spread, and we don’t know how it will affect the economy, “ said Annika Winsth.
Jersey, on the New York stock exchange. Photo: Richard Drew,
the pass is in the power of statistics without having to leave a deeper trace is what is known as the purchasing managers index. It is a measure of the business cycle, with the help of new orders, production, employment and delivery times. The figure of 50 indicates unchanged activity.
it was just dropped, this index in China to 35.7, the lowest figure recorded. It underscores the economic damage that the spread of the coronavirus has made, and, in particular, runs the risk that, in the country. Such a low value even in the case of the financial crisis for more than a decade ago.
To be equivalent to the index in Europe, up of 49.2 in February, compared with the 47.9 in January), have the most to do with the fact that this question was asked prior to the spread of the virus began to be felt in Europe. Therefore, it is not to take on too much fixed on, view Annika Winsth, and Länsförsäkringars chief economist, Alexandra Stråberg. The impact, however, will be visible the next time the statistics are reported.
It is clear that the coronavirus is severe, but it’s the psychological effects that to have the greatest impact.
to think that the Fed chairman Jerome Powell, had been almost the of the its timing to communicate the central bank’s intentions, in order to try and quell the situation before it gets really bad.
In Sweden, we wouldn’t have been as hard on the toes, as in the united states. Stefan Ingves said that he (the governor) has said that they are going to take in the facts, and wait and see, “ says Alexandra Stråberg, on the phone from the Canary islands, where she is on vacation.
in the distance, – the leave of a group of islands off the european mainland, she says that she had a vision of what appears to be this hysteria, which is currently affecting the perception of the virus.
„It is clear that the coronavirus is severe, but it’s the psychological impact that has the greatest impact,“ she says.
the major companies, which they may need to be, she describes.
“ But the man on the street: what is the stimulus helping? I’m not sure it’s so much of it. All of the effects we are seeing now are the precautionary measures to be taken for the fact that we don’t know. We are not at the peak of the distribution and the uncertainty is large. How will you stimulate it off? ask Alexandra Stråberg.
the Industry is not producing as usual. And people don’t travel that normally. The stock exchanges in the world lost in one week what they’d been up for three months of the year.
“ It’s the uncertainty of not knowing where all this is going to be located in the event that is the psychological effect. As long as the uncertainty remains, the people and the markets react quite strongly, “ she says.
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