Charting the Economy: Central Banks Tremble at Crash of Markets

(Bloomberg) -- Global central banks are back on a crisis footing they haven’t adopted since the turmoil of 2008, after the coronavirus pandemic forced them to deliver emergency stimulus and sparked a financial-market crash.

A week of panic inspired unprecedented joined-up fiscal and monetary action by the U.K., a package of targeted aid by the European Central Bank, stimulus from the People’s Bank of China, an easing pledge from the Bank of Japan, and more firefighting by the U.S. Federal Reserve. The desperate hope of policy makers is that they can soothe economies increasingly frozen by measures to contain the outbreak.

Here are some of the charts that appeared on Bloomberg this week, offering a pictorial insight into the latest momentous developments in the global economy.

Europe

The Bank of England and Norway’s central bank lowered their benchmarks in emergency 50 basis-point cuts this week. Meanwhile, the ECB presented a package of easing and liquidity, but failed to deliver a rate reduction.

The U.K.’s largest fiscal giveaway in almost three decades will be rooted in a borrowing binge that takes advantage of rock-bottom interest rates.

U.S.

The coronavirus-induced slump in interest rates is generating a flurry of U.S. home refinancing. A measure of loan applications to refinance soared 78.6%, the biggest weekly advance since November 2008, as the average fixed rate on a 30-year mortgage tumbled to match an all-time low. Smaller home-loan payments help put more cash in the pockets of consumers at a time when the health crisis dims the outlook for the economy.

Asia

The Bank of Japan will likely expand its stimulus measures at its meeting next week as it seeks to limit the blow from the coronavirus outbreak and reassure volatile markets, according to people familiar with the matter.

The People’s Bank of China cut the amount of cash that banks have to set aside as reserves, injecting funds into the world’s second-largest economy at a time when global policy makers are racing to head off the negative impact of the coronavirus outbreak.

Emerging Markets

If the oil face-off between President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman turns on who has a stiffer fiscal backbone, it’s the ruble that could help carry Russia to the finish line.

World

A supply-driven drop in oil prices would normally be a positive for global growth, cutting costs for businesses and putting more money in consumers’ pockets. This time, that might not be the case, according to Bloomberg Economics: Producers will still lose -- though evidently Saudi Arabia sees long-term benefits from squeezing higher-cost competitors. Consumers will gain, but with the risk of a coronavirus-induced shutdown looming, they might not have the motive or opportunity to divert their energy savings to other spending.

--With assistance from Yinan Zhao, William Shaw, Vince Golle, Toru Fujioka, Sumio Ito, Miao Han, Jordan Yadoo, David Goodman, Anya Andrianova, Andrew Atkinson, Abeer Abu Omar and Scott Johnson (Economist).

To contact the reporter on this story: Zoe Schneeweiss in London at zschneeweiss@bloomberg.net

To contact the editors responsible for this story: Simon Kennedy at skennedy4@bloomberg.net, Craig Stirling

©2020 Bloomberg L.P.