The Two Words Every Central Banker Wants to Hear
The Fed has cited “global developments” for its past three rate cuts. To stem the economic hit from the coronavirus, a fourth is needed.
Come under my wing.
Photographer: Joshua Roberts/BloombergFor central bankers around the world, acting locally now means thinking about China.
The spread of the coronavirus will likely hit mainland growth hard enough to warrant a global monetary-policy response. That means cuts in interest rates to follow last year's easing steps. To do otherwise would be tantamount to denying the enormous role China plays in international commerce relative to 2003, the last time an epidemic dented the country’s expansion. At that point, global growth barely missed a beat. This time, it will suffer, and quickly. Central banks moved decisively as the trade war unfolded and global sentiment soured; discarding such a such a useful template would be a waste.