Central banks are showing willingness to help

Published on: 30-Apr-2020
Category: Trading
Last updated: 30-Apr-2020

Central banks are showing willingness to help

The Japanese central bank announced a major bond purchase program this week to fight against the economic consequences of the corona crisis. The American Fed and the European Central Bank (ECB) have now also commented on their upcoming monetary policy.

The ECB remains at the key interest rate of the euro at a record low of zero percent and decides on further measures to stabilize the economy. To facilitate long-term financing, a new bank lending program to companies is being introduced. The new conditions will also apply to loans that are already running. As reported at the Thursday meeting, the new decisions will come into force in May.

The Federal Reserve has helped the American economy with billions of dollars in aid and a constant cut in key interest rates in recent weeks. Here too, the key interest rates remain unchanged at 0 to 0.25 percent. As the Fed announced on Wednesday after two days of deliberation, the US is facing "a sharp drop in economic output and an increase in unemployment". But the central bank will do everything possible to ensure that the US economy survives the crisis. Gross domestic product fell 4.8 percent in the first quarter of the year, as was announced on Wednesday.

Many investors have expected new securities purchases or cash injections, but the central banks are limited to willingness to offer further assistance in the future.

The euro barely responds to central bank statements and remains at $ 1.0845. This means that it has only moved slightly downwards and the weak economic data from southern European countries are also not bringing the currency out of balance.


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