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G-7 to Coordinate Their Efforts in Fighting Coronavirus, Mnuchin and Powell to Lead a Call

UTC by Teuta Franjkovic · 3 min read
G-7 to Coordinate Their Efforts in Fighting Coronavirus, Mnuchin and Powell to Lead a Call
Steven Mnuchin. Photo: World Economic Forum / Flickr

Led by U.S. Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell, a G-7 call will be devoted to the discussions of the coronavirus outbreak and its economic impact.

Financial ministers and central bankers from all over the world are planning to hold a conference call on Tuesday in order to coordinate their financial and economic responses regarding the spreading coronavirus. The teleconference call will be led by Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell on Tuesday at 7 a.m ET. Representatives of the G-7 industrialized nations will attend the call devoted to the coronavirus issues.

Stocks went crazy on Monday on hopes that global central banks will take action soon to offset any impact from the deadly coronavirus.

Dow Jones Rallies amid Coronavirus Concerns

Major stock market indexes in the United States finished significantly higher, with the Dow Jones Industrial Average jumping over 1,290 points in the last minutes of trading as it recorded its biggest jump since 2009. Meanwhile, President Donald Trump met with representatives of pharmaceutical companies in the White House to discuss the U.S. coronavirus response. Earlier in the day, the U.S. confirmed that six people died in the country from the virus officially known as Covid-19.

The Dow surged 5.09% at the end of the day, recording its largest daily point increase in history.

No Specific Calls for Interest Rate Cuts

The Group of Seven industrial powers said they will be making a statement for their finance leaders to give them leads about dealing with the coronavirus impact. However, for now it will not specifically call for new government spending or coordinated interest rate cuts by central banks.

Connor Campbell of SpreadEx commented:

“There are rallies, and there are rallies – and boy did the Dow Jones RALLY on Monday night, posting its greatest ever points gain on the hopes that the world’s central banks can muster a co-ordinated response to the coronavirus this Tuesday. It is a sign of just how bad the final week of February was that the Dow’s 1,297 point – or 5.1% – increase still leaves it almost 3,000 points off of where it was on Valentine’s Day.”

“Nevertheless, after a weekend full of stimulus-suggesting statements, news that the central bank chiefs and finance ministers of the G7 would be having a conference call to discuss an action plan – like a fiscal version of the Avengers – designed to combat the coronavirus crisis was enough to point the markets in the right direction”, added he.

In the statement, expected on Tuesday or Wednesday, the G-7 countries will promise to work together to diminish the damage that the coronavirus spread did to their economies.

Trump Wants Australian Model of Rate Cuts

United States President Donald Trump urged the Federal Reserve to cut rates again on Tuesday amid uncertainty over the coronavirus outbreak.

He said:

“Australia’s Central Bank cut interest rates and stated it will most likely further ease in order to make up for China’s Coronavirus situation and slowdown. They reduced to 0.5%, a record low. Other countries are doing the same thing, if not more so.”

However, he added that the Fed “has us paying higher rates than many others, when we should be paying less. Tough on our exporters and puts the USA at a competitive disadvantage. Must be the other way around.”

Earlier this week, the Organisation for Economic Co-operation and Development (OECD) warned that the coronavirus epidemic could halve global growth this year to 1.5%. The Federal Open Market Committee is set to meet on March 17-18, when policymakers are expected to cut rates.

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