What Central Banks Did This Week as the Virus Hit Global Markets
- Fed, BOJ ran liquidity operations to keep markets functioning
- ECB, BOE created stimulus programs aimed at aiding economies
Photographer: Saul Loeb/AFP via Getty Images
Global central banks stepped up their crisis-fighting this week in a campaign to keep markets functioning and economies growing as the coronavirus looks increasingly likely to tip the world into its first recession since the financial crisis.
Among the tools deployed: Interest-rate cuts, asset purchases, currency interventions and liquidity injections.
Markets reacted just as aggressively. Trading volatility spiked to levels not seen since the financial crisis as the S&P 500 Index’s historic bull run came to an end and signs of illiquidity emerged across debt markets. Even the $17 trillion U.S. government-bond market wasn’t immune, with the gap between prices bid and sellers’ offers widening sharply. Meanwhile, the dollar staged its biggest jump in 12 years, climbing to a three-year high, as investors piled into haven assets.
With more action likely next week, here’s a rundown of what happened this week: