Markets Have a Thin Safety Net After Russia's Invasion of Ukraine
The Fed has options to reassure investors and steady the global economy, but they are neither cost-free nor straightforward.
No white knights here.
Photographer: Stefani Reynolds/BloombergCentral banks have been a powerful tool to steady the global economy in crises past. Their ability — and willingness — to do so now is constrained. The terrain is tougher and the costs of a rescue are higher.
The price Russia pays for its invasion of Ukraine, not to mention the fate of the global pandemic recovery, depends to a large degree on whether Western monetary authorities deploy their muscle and what they are prepared to sacrifice along the way. Less than a week ago, policy makers in most countries were talking about how fast to withdraw support, not how much would need to be extended. Do officials jettison the fight against the highest inflation in decades? Is there a way to stave off financial upheaval without resorting to Covid-era or post-Lehman responses?